For many households, when the children are out of the nest it provokes mixed feelings.
Surprisingly, far too many couples don’t take advantage of the opportunity to save money for retirement. Here are some of the pitfalls, according to The Center for Retirement Research at Boston College:
- Households are not saving by paying down debt quicker after the children become independent.
- Parents also do not continue to provide more money to children after they leave.
- Parents are, however, reducing the number of hours worked and earn about $2,000 less per year after their children become independent.
- Consumption relative to income decreases by 6 percent after children leave but net worth remains unchanged, so the conflict remains.
Why are some families not taking advantage of reduce household expenses once kids fly the coop? They may still be supporting children, even if they are not at home. They also may be helping them with college debt.
Nevertheless, there are ways to bolster retirement savings for empty nesters. Some simple suggestions include:
1) Increase automatic contributions to Roth and 401(k) accounts.
2) Build up emergency savings in insured money market accounts.
3) Reduce all forms of debt, particularly expensive credit card and installment debt.