Your kids have left the nest! With all the free time you have now, it’s a good idea to evaluate your goals, review your finances and bolster your savings so you’re on the right path toward a financially sound retirement. Here are some tips for a money-smart future.
1. Re-evaluate Your Spending
With the kids gone, you should have fewer monthly expenses. Having an empty nest will affect almost every area of your budget, from transportation needs, to cable, to grocery bills. Assess how much you were spending and where you can cut back now. An apps can help you organize your new budget and put together a financial plan.
2. Revaluate Your Retirement Strategy
Most Americans aren’t saving enough money and don’t know how to plan for retirement. Now that your kids are off on their own adventures, you should think about how much you need to save for retirement each year so you can live out your golden years in comfort. With less financial responsibilities, you have more flexibility to contribute funds to your savings without drastically changing your lifestyle. It’s a good idea to talk with a financial professional1 who can review your finances, give you advice on how to achieve your goals, and work with you to develop a good plan.
3. Cut Back on Financial Support
It isn’t easy to cut your kids off financially, but now that they’ve left it’s time for them to learn to survive on their own. Cutting the cord doesn’t mean you won’t still worry about their well-being, but you need to spend your time and money on taking care of yourself. You’ve earned it! Start slow, you don’t need to cut all the purse strings right away. Stop paying for smaller things before moving to major financial items. Additionally, encourage your child to get a part-time job while at school so they have their own money. Not only will cutting back save you money, it will better prepare your adult kids for their future.
4. Make a Plan for Your Estate
Even if you are only in your 40s or 50s when your kids leave the nest, you aren’t too young to consider what you’d like to leave behind for your children and grandchildren, and who will manage your estate. Research your options and don’t be afraid to contact a professional for more information.
5. Downsize Your Home
With the kids gone, you probably don’t need to stay in a large house. Downsize to a smaller home that fits your new lifestyle. You’ll save money on utilities and home maintenance costs, which can free up money to build up your savings or pay off any debt you have.
6. Reconsider Healthcare and Insurance Needs
Becoming an empty nester means it’s time to reconsider scaling back your life insurance, which is designed to help your dependents maintain their standard of living in the event of your death. If you’re still relatively young and you have less people depending on your income, you may not need to put as much into a policy. If you’re older, life insurance may be more of a necessity to help your family pay for final expenses, such as your funeral costs or debt. Talk to your insurance agent about the types of life insurance policies that might be right for you.
Think About Long-Term Healthcare
You should also start thinking about your long-term health care needs. Medicare does not cover long-term care, so investigate other types of healthcare insurance and the costs, such as long-term care insurance, which is a policy that covers basic daily needs over an extended time such as the cost of chronic illnesses or disabilities.
1The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.