Rottke, S. and Klos, A. (2016). Savings and Consumption When Children Move Out Review of Finance, 20(6):2349--2377.
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Affiliated author
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Publication year2016
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JournalReview of Finance
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.