That’s the headline of another superb study by the Center for Retirement Research at Boston College. The issues, data, charts and methodology are all presented, and here is the study’s conclusion:
“Households’ financial response to the kids leaving may seem like a matter of personal preference, but it has important implications for retirement preparedness. If households stand pat and maintain their total consumption when the kids leave, they will aim to keep that consumption level in retirement and will have less savings with which to do it. If, instead, they increase saving, they will have more retirement assets and a lower level of consumption to maintain. The results in this brief suggest that when the kids leave, households do increase their saving through their 401(k)s, but just slightly.
The size of the increase is more consistent with research that suggests roughly half of households do not have enough savings for retirement than with the optimal savings research. Although this finding is not the last word on the subject – perhaps parents assist children financially even after they have left home – it does suggest that we should be concerned about households’ preparedness for retirement.”