Savings and Consumption When Children Move Out

Review of Finance, Volume 20, Issue 6, pp. 2349-2377, October 2016, DOI: 10.1093/rof/rfv064

SOEPpaper No. 621

58 Pages Posted: 28 Jan 2014 Last revised: 6 Dec 2017

See all articles by Simon Rottke

Simon Rottke

University of Amsterdam - Finance Group; Tinbergen Institute

Alexander Klos

University of Kiel - Institute for Quantitative Business and Economics Research (QBER)

Date Written: December 20, 2013

Abstract

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

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

Simon Rottke (Contact Author)

University of Amsterdam - Finance Group ( email )

Roetersstraat 18
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Alexander Klos

University of Kiel - Institute for Quantitative Business and Economics Research (QBER) ( email )

Heinrich-Hecht-Platz 9
Kiel, 24118
Germany

HOME PAGE: http://www.qber.uni-kiel.de/

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