Many empty-nesters spend more, not less

The kid(s) has finally left home, and you and your spouse are all alone. Now's a great time to boost the retirement savings you've been neglecting. That child who cost $222,000 to raise (more or less) is no longer a drain on the bank account.

That would make sense. But a study by the Center for Retirement Research at Boston College found the opposite occurs in many households: The empty-nesters start spending more on themselves. The study (.pdf file) concludes:

Households face a choice when their children leave home. They can save more for retirement or in­crease per-capita consumption. The above research shows that households choose the latter, increasing per-capita, non-durable consumption by 51% on average. As a result, many are at risk of entering retirement with insufficient wealth to maintain the level of consumption they enjoyed while the children were in the house, let alone the increased consump­tion they enjoyed after the children left home.

The center also estimates that nearly half of adults aren't saving enough for retirement, reinforcing other bad news we've read about our future lives. A recent survey by Wells Fargo found that the average retirement savings of 50-somethings is only $29,000. An older survey by Bankrate found that one in five people fear they won't ever be able to retire.

What's going on here? An article in the Chicago Tribune strongly suggests that many people are clueless about how much money they'll need to retire comfortably. Jean Setzfand, director of financial security at AARP, told USA Today that many retirees underestimate how much they'll have to pay out-of-pocket for medical costs, including long-term care.

• Retirement IQ Test

Many who are already retired are paying a price for not saving more. That USA Today article says that "people 65 and older are the fastest-growing segment of the population seeking bankruptcy protection." 

What could you be doing to improve your future security? Face your coming reality head-on. There are plenty of retirement calculators that can help you get a handle on this. I had fun (OK, probably an overstatement) playing around with some of the retirement calculators at MSN Money last night:

• Determine Your Retirement Expenses Calculator.
• This calculator will indicate whether you're saving enough.
• This one shows how long your retirement savings will last at your predetermined spending rate.
• For a different take, try: What's your magic number?

Sure, lots can change between now and when you hope to retire. But at least these calculators point to the factors you need to think about.

What if you're 55 and haven't saved much for retirement? MSN Money's Liz Pulliam Weston offers good advice once you've run the numbers:

• Work longer. Or at least work part time, if you can, after you retire. "Every $5,000 you earn means you need $100,000 less in assets, financial planner Ross Levin says, assuming you'll tap 5% of your nest egg annually in retirement," Weston wrote.
• Figure that you'll get Social Security. Many fear that the long-term prospects of Social Security are threatened by the payroll tax cut included in the tax compromise President Obama signed last week. We suspect (and hope) this tax holiday will be a one-time deal. 
• Focus, focus, focus. Slash your spending to essentials and put those savings into retirement accounts, not into your kid's tuition or anything else. If you're self-employed, consider setting up an individual 401k or similar account. (It's easy. I did it yesterday.) The maximum you can stash in your IRA won't be enough.

Downsizing your home may also help, but may not be possible depending on where you live. What about paying off the mortgage? That's a complicated issue that Weston examines in another article.

What if you find yourself drowning in debt from medical bills and other unanticipated expenses once you're retired? Bankruptcy might be a good option -- allowing you to preserve your retirement savings, your Social Security and likely your house.

If you're retired and have had to pay basic bills with credit cards for six months, it's time to seriously consider bankruptcy, USA Today suggests.

More from MSN Money:

• 55 and haven't saved a dime? Yikes
• Get ready to retire on $190 a month
• Your magic number for retirement
• Should you bail out spendthrift parents?
• Growing old and going broke
• Yes, you will live to be 80