Savings and Consumption When Children Move Out

Based on the Italian Survey on Household Income and Wealth (SHIW) and the German Socio-economic Panel (SOEP), we show that household consumption drops after a child moves out of a household, while at the same time, per capita consumption increases significantly. Parents approximately upgrade their personal lifestyle up to the level of childless peers after all children are gone and save only a small proportion of the freed-up resources. Since parents had fewer resources to save while they were young, retirement preparedness among them is a more serious concern than among childless individuals.

Keywords: Household Finance, Consumption, Savings, Children, Retirement Preparedness

JEL Classification: D12, D14

Suggested Citation: Suggested Citation

Rottke, Simon and Klos, Alexander, Savings and Consumption When Children Move Out (December 20, 2013). Review of Finance, Volume 20, Issue 6, pp. 2349-2377, October 2016, DOI: 10.1093/rof/rfv064 , SOEPpaper No. 621, Available at SSRN: https://ssrn.com/abstract=2385894 or http://dx.doi.org/10.2139/ssrn.2385894