What Are the Effects of Doubling Up on Retirement Income and Assets?

Abstract

The Great Recession has amplified the increase in socioeconomic instability and inequality in the United States.  While much work has been conducted on retirement income and assets, not much work has been undertaken on seniors moving in with their adult children and grandchildren, possibly to save on housing costs.  Utilizing Survey of Income and Program Participation (SIPP) 1996, 2001, 2004, and 2008 data for seniors 65 and older, we conducted descriptive statistics and three types of models.  First, we used discrete-time event history modeling to analyze the effect of changes in retirement income, assets, debt, and social welfare program participation between the current and previous interview on the propensity of moving into a multigenerational household, controlling for other factors.  Then, we used logistic and linear regression to understand the effect of living in a multigenerational household on changes in seniors’ retirement income, assets, debt, and program participation, controlling for other factors.  We also expanded our analyses to control for household type, i.e., a senior moving in with adult children or grandchildren or vice versa, and for time, i.e., whether the recession impacts our results.

The paper found that:

• Experiencing economic distress increased the odds that a senior would move into a multigenerational household over the previous year or previous four months.
• Seniors living in multigenerational households were more economically disadvantaged than seniors not living in multigenerational households.
• Seniors living in multigenerational households were more likely to enroll in a social welfare program over the past four months than seniors not living in multigenerational households.
• The relationships between seniors’ multigenerational household formation and economic outcomes did not change much during the recession.

The policy implications of the findings are:

• Living in a multigenerational household may have a potentially destabilizing effect on seniors’ economic well-being.
• Policymakers may want to target financial education and counseling to seniors living in multigenerational households.