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Financial Moves for Empty Nesters: 4 Helpful Tips

Learn empty nester financial tips and understand why this is a good time to revisit your finances.

Tackle This Life Transition with Optimism and Financial Savvy

When your children grow and ‘fly the nest’ it’s a major milestone. You’ve spent many years nurturing them, and now is a good time to nurture your finances. This phase of your life offers a prime opportunity to reassess and reevaluate your financial strategy to ensure your family’s financial future is sound. We offer four helpful empty-nester financial tips below. Read on to see if any are right for you.

Becoming an empty nester is a significant life transition, and you may need more than empty nester financial tips to navigate it. After all, it’s an emotional time, too. You may be feeling pride and excitement, loneliness and anxiety, or anything in between. However, this phase truly does offer a smart opportunity to take a hard look at your financial plans and look for ways to strengthen them as you move into this time in your life.

Empty Nester Financial Tips: Help Your Kids Learn to Determine Their Own Financial Future

Our children are still our children, no matter how long it’s been since they’ve gone off on their own. It’s natural to feel responsible for their well-being, including their financial stability. However, it’s all too easy to fall prey to wanting to continually help them out financially. A recent survey found that about 45% of parents with adult children provide financial support to at least one grown child. This includes helping to pay for things like groceries, cell phones, rent or mortgage payments, and student loans. More than 50% of these grown children are upwards of 24 years old.

SEE ALSO: Adjusting to Retirement: 8 Helpful Tips

 

While wanting to help your children is perfectly understandable, you may be doing them a disservice if you don’t help teach them how to manage their own financial affairs. This becomes especially pointed if it comes at the price of your own financial future. That’s why this first of the empty nester financial tips we’re sharing is actually more focused on your kids. Consider sharing your knowledge and experience with them. Take some time to help them build a budget, set goals, and map a course to help them achieve those goals. It can be a smart empty nester move because the more financially independent your kids become, the more you can focus on your own financial plan for the future.

Empty Nester Financial Tips: Give Thought to Your Current Real Estate

Moving is one of the most stressful events in life, isn’t it? In fact, many people avoid it at all costs. However, it is a fairly common move for empty nesters because this phase of life is an ideal time to reconsider your living situation. Do you still need a house big enough to raise a family in? Perhaps there’s a community that you’ve had your sights on for some time. While the prospect of downsizing may seem fraught with emotions, it can deliver valuable financial benefits. Selling a larger home for a smaller one can bring you potential profit while lowering your costs of expenses and maintenance. All of this can help boost your retirement savings.

If moving to a smaller home isn’t part of your plan, then prioritize paying off your mortgage before you retire. This can help you to preserve the asset of equity that your real estate provides while maximizing your retirement savings.

SEE ALSO: Social Security and Your Retirement Plan: Making the Most of Your Benefits

Empty Nester Financial Tips: Revisit Your Retirement Plan

Without the expenses that inevitably come with raising children, it’s important for empty nesters to reassess their retirement plans. There may well be a bit more cash on hand to invest and grow for your future.

Some empty-nester financial tips that can help you shore up your retirement savings with that extra money can include making catch-up contributions to your 401 (k). For 2023, the catch-up contribution allows you the opportunity to contribute an additional $7,500 on top of the current limit of $22,500.

You may also want to think about spreading your savings strategy across different kinds of accounts that have different tax treatments to take full advantage of available opportunities. A Roth IRA is funded with after-tax money and offers tax-free growth and tax-free withdrawals in retirement. There’s also a catch-up contribution for IRAs available to people over 50, giving you the option to add an additional $1,000 to the maximum which can boost your total contribution potential to $7,500 in 2023.

Empty Nester Financial Tips: Establish an Estate Plan

Since your children are living on their own and you are now in midlife or beyond, you may want to establish an estate plan. It’s a smart move for adults of any age, and if you’ve overlooked this up until now, you’re not alone. Only 34% of Americans have an estate plan, and  46% of Americans don’t have a will.  These tools are safeguards for the future security of your loved ones, so there’s no time like the present to get them in order.

To get started, take stock of your goals and wishes for both you and your loved ones. While it can be emotionally difficult to think about end-of-life plans, take comfort that an estate plan can pay big dividends toward your hard-earned legacy.

Among the tasks to achieve is to make a list of assets and debts to get a solid picture of your big financial wishes. You will also need to gather important documents like marriage certificates, divorce papers, insurance documentation, deeds, titles, and bank accounts. With all of this in place, select a medical and financial power of attorney. You need to choose an executor of your will and any trustees if you choose to. Be sure to hire a financial professional to review, draw up, and certify your plans according to law. While this may be uncomfortable, be sure to communicate with your family about your plans and wishes. Being open and honest about your estate plan now can lessen negative feelings or family conflict in the future.

Empty Nester Financial Tips: Are You Ready to Tackle This Phase of Life?

Becoming an empty nester brings many opportunities, but it can also be challenging. Give yourself time to adjust to this “new normal” and focus on ways to make the most of this new phase, including strengthening your financial standing. The changes you make to your financial priorities now can help you enjoy more security and a fulfilling future.

If you’d like professional guidance as you plan for your future, we are available to discuss the empty-nester financial moves that are right for you. At Arbor Capital, we provide personalized wealth advice and investment solutions for you and your family, and we are happy to answer any questions you may have about our services. Reach out today to schedule an initial conversation!

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