Baby boomer empty-nesters boost spending, not saving
I was surprised – shocked actually – by what I read in a recent Chicago Tribune article about the spending vs. savings trends of baby boomers when they become empty nesters.
They found a marked increase in spending once children left. Households with children living at home spent $4,700 to $5,800 a person per year on non-durable goods from 2001 to 2007. That was a lot less than adults without children, who were spending on average $8,800 to $10,300.
Once children left home, the parents apparently decided to give themselves a break. The newly freed parents spent about $2,000 more a year per person on average than the parents who still had children at home.
I guess it explains why so many of our generation are unprepared for retirement. They go money-crazy when their kids leave. Thus, according to the same research organization, approximately 43 percent of households risk being being unable to maintain their pre-retirement standard of living.
What are these people thinking? I understand shifting existing spending from supporting the kids to more personally satisfying spending categories. But why would you immediately ratchet up your spending? If you are behind in your retirement saving, the empty nest presents an excellent opportunity for saving catch-up.
I agree with the speculation in the article: Lots of new empty nesters have no idea that they are increasing their spending because they do not budget or even attempt to track their cash flow. This, in my opinion, is retirement malpractice of the highest order.
The time to track spending – and net worth – is now – then keep doing it, even when your living conditions change. If you don’t measure it, you can’t manage it.
Here is the complete article: Warning to empty-nesters: Boost saving, not spending
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