7 financial tips for empty nesters

January 18th, 2011 John Evans

With kids out of the house, the empty nest period is typically a time of high discretionary income and a high potential for relative savings. It is also the time to think seriously about retirement and get plans in place for the future. After all, with the “golden years” just around the corner you can’t afford to make any missteps.

While there is no universal formula to ensure a comfortable retirement, we’ve put together some tips that will help you manage the savings process and ensure you are as prepared as possible.

1. Fine tune your holdings – As you approach retirement, it’s wise to flip some of your riskier assets, such as speculative stocks, to more conservative savings vehicles, like bonds or annuities. Finding the right split between riskier and more conservative allocations is one of the most difficult decisions you will make. Seek out a financial professional if you need help with this.

2. Consider downsizing – As your kids become independent, you may want to consider downsizing your nest. Although it can be difficult to say goodbye to the home where you’ve raised your children, it can present tremendous savings opportunities to downsize to a smaller house.

3. Have a plan – Develop a roadmap for your investments and a schedule for withdrawing the money. This will allow you to determine, very quickly, where you stand in terms of your fixed retirement income.

4. Get out of debt – When you’re retired you don’t want to spend your fixed income on paying off loans or mortgages. Make it a goal to get out of debt before you enter retirement. Having a paid-off home is particularly valuable. Talk to your banker or mortgage lender about paying off your mortgage as quickly as possible.

5. Track your expenses – You can’t determine how much money you will need for your retirement unless you know how much you’re spending on a regular basis. Start tracking your expenses if you’re not doing so already. Then, compare your expenses with your income to determine if you need to adjust your savings.

6. Project a budget – Project a budget for the next 10 years of your life, keeping in mind that some costs, like health insurance, may increase while others may disappear. Once you have estimated your expenses, consider your savings and how long they are likely to last. You may have to adjust your retirement contributions accordingly.

7. Picture your retirement – Start thinking about what type of life you want to lead when you’re retired. Do you want to travel? What will you do to stay busy? Having a clear vision of your golden years will help you have a more successful retirement.

As baby boomers head into the empty-nest phase, more and more Americans will deal with these changing financial issues. Don’t let this new phase in your life catch you off guard. It’s a great opportunity to pause, reflect and start planning for the golden years.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate to you, consult your financial advisor prior to investing.
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John Evans

About the author

John Evans is Investment Services Manager at MidWestOne Bank. He specializes in investments and retirement planning.

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