Ways to reduce spending after the children have left

Jul 08, 2011

Empty nest does not have to mean empty wallet

Many Americans have trouble adjusting to a new financial life when their children leave home. While this may not seem like a major problem on the surface, money that is being misallocated may be eating away at valuable retirement funds, or supplemental life insurance plans.

Parents tend to spend more money on vacations and luxury purchases once they find themselves alone in the home, according to a study by Boston College's Center for Retirement Research.

"Instead of taking the money that they used to spend on their kids and using it toward their retirement, they're not changing their household spending and, in fact, are increasing their per-capita spending," says Norma Coe, an associate research director at the center and co-author of the study.

In an effort to reduce spending financial planners recommend taking small steps that may produce large savings. Experts believe that some easy ways to save money may be canceling adult children from car insurance policies or removing them from the cell phone plan, according to DailyFinance.

Parents should also look into taking children off of their health insurance plans, if possible. Some young adults may have their own policies, but without notifying the proper insurance agents parents could be covering them as well.  

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