Savings and Consumption When Children Move Out. (8th February 2016)

• Record Type: Journal Article
• Authors: Rottke, Simon; Klos, Alexander
• Is Part Of: Review of finance. Volume 20:Number 6(2016)
• Page Start: 2349
• Page End: 2377
• Publication Date: 2016-02-08
• Subjects: D12 -- D14; Finance -- Europe -- Periodicals; Financiën; Finance; Periodicals; 332.09405
• DOI: 10.1093/rof/rfv064
• Languages: English
• ISSNs: 1572-3097

Abstract

Abstract : We show, using data from the Italian Survey on Household Income and Wealth and the German Socio-economic Panel, that household consumption drops after a child moves out of a household, while at the same time adult-equivalent consumption increases significantly. After all children are gone, parents upgrade their personal lifestyle to a level approximately that of childless peers, 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.