Do people save more when their kids leave home? Do empty nesters jump on the opportunity to bulk up their DC plans and batten down the hatches for a smoother sailing retirement?

Unfortunately, the existing studies on the matter draw maddeningly inconsistent conclusions. For instance, not all researchers agree that empty nesters save more. They might consume less. But they also might be working less to enjoy their leisure time and thus derive less income. If they do have extra money, it might not be getting socked away into 401(k)s.

Authors Andrew G. Biggs, Anqi Chen, and Alicia H. Munnell decided to tackle these inconsistencies in a new report sponsored by the Center for Retirement Research at Boston College. After all, these questions have important ramifications for people’s readiness for life after work.

“If households are both consuming less but not saving more after their children leave, the question that arises is where are the resources going?” asked the authors of the report, called, “How Do Households Adjust Their Earnings, Saving, And Consumption After Children Leave?”

“One potential way to square the circle is recognizing that 401(k) accounts are not the only way for households to save,” the authors write. “Parents could be paying down their mortgage or other forms of debt, which is increased saving, after their children leave home. Examining other accounts could show that parents are increasing savings.

“Another explanation [for the inconsistencies] is that typical measures of consumption do not capture all the ways that households expend their resources—parents could continue to provide financial support for their children by helping with home down payments or paying off student loans. A broader definition of consumption that includes financial transfers might suggest that parents are not reducing consumption after children leave. Finally, parents may also opt for more leisure and, as a result, less work and income when their children leave home, which could produce a decline in consumption and yet no increase in saving.”

The authors looked at data from the University of Michigan’s “Health and Retirement Study” and the university’s “Panel Study of Income Dynamics.” The tricky parts of doing the study, says the Center for Retirement Research report, are defining consumption and deciding which children are truly independent (which might not include college students outside the home who are still being supported).

According to Biggs, Chen and Munnell, “The results from the [Health and Retirement Study] show that parents do not pay off their mortgage more quickly or continue to provide transfers for their children after they have moved out. Instead, parents reduce the number of hours worked by about one hour a week or adjust to a more flexible but lower paying job, resulting in lower annual earnings of about $2,000 to $2,500 a year, or about 3.3% of earnings. An analysis of the [Panel Study of Income Dynamics], which includes younger parents, confirms these findings.”

The authors say that a household’s consumption does fall by 6% relative to income when then children fly the coop, but that net worth is stubbornly static.

As far as policy, the paper concludes: “Savings and consumption are not the only levers that parents can adjust after children become independent, they can also adjust hours worked and earnings.”

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