(UM14-04) - Do Extended Family Linkages Reduce Retirement Wealth and Consumption?
Robert F. Schoeni and Kathleen McGarry
There are many stories of retirement-age parents providing significant resources to their children as the latter deal with unemployment, marital instability, postsecondary educational expenditures, and the cost of raising their own children. Recently, these developments have occurred at the same time that some older parents are grappling with their own job loss and asset reductions due to the Great Recession. We propose to examine the extent to which the economic well-being of extended families is linked. We will test whether income of adult children, as well as major events in their lives -- such as unemployment, divorce, and becoming a new parent -- influence the consumption and wealth holdings of retirement-age parents. These questions can now be answered with new data on consumption and wealth in the PSID.