Becoming an empty-nester: 6 things you need to consider

September 14th, 2011 Doug Benjamin

As your children become more independent and establish their own families and careers, you’ll find yourself with more time, more money and, more than likely, more space. With retirement just around the corner, the challenge as an empty nester is to put those extra resources to good use.

We’ve put together six key action items for this phase of your life:

1. Conduct a financial check up.

With your kids out of the house, it’s likely that your financial plan is outdated. After all, many of the assumptions built into the old plan may now be obsolete. For example – college payments are over, your children are no longer on your health insurance, etc. Take the time to analyze your new situation and build a new financial plan. Some questions to consider are:

  • How is your money positioned? Is it earning interest, or should it be re-allocated so it’s doing more for you?
  • What is your need for liquidity?
  • How much debt are you carrying? What is your plan to pay off that debt?
  • Is your debt structured properly?
  • Are you making use of all possible tax advantages?
  • Are you saving enough for retirement or do you need to start setting aside more money?
  • How risky are your investments? Should you start looking at more risk-averse investments?

2. Think about your dreams and goals.

This is an ideal time in your life to talk with your partner and family members about how you envision your remaining working years and retirement. Do you want to travel more? How long do you want to work? Do you want to move? The answers to these types of questions will help you map out where you need to be financially to make those dreams a reality.

3. Seek out savings opportunities.

Seek out new opportunities to save. Re-evaluate your insurance policies to ensure you are getting the best rates possible. Since your dependent situation has changed, many of your rates will likely go down. Also – are you ready to downsize your home? Many empty nesters find that they would be just as comfortable living in a smaller home. Once you start looking for savings opportunities, you’ll begin to find them everywhere.

4. Put your extra money to good use.

Since you’re likely not financially supporting your children anymore – at least not to the extent as when they were young – make sure you are taking advantage of the extra savings you will now have. Instead of spending the money, use it to plump up your nest egg.

5. Pay off your debt.

Make it your number one priority to pay off your debt before you retire. After all – paying off debt with a fixed income can be very challenging! Take control of your debt and establish a plan and budget that will allow you to pay off debt more aggressively in the years ahead.

6. Assess your retirement savings.

Take a good look at your existing retirement savings and determine what adjustments you need to make in the years ahead. Are your savings on the right track, or do you need to start putting away more money? Do you need to become more conservative in your investments? Is your money diversified properly? How have the recent economic fluctuations impacted your savings? Sit down with a financial advisor to make sure you are on the right track.

Becoming an empty nester is exciting and also a bit daunting. By following these simple action items you will become more confident in your finances and the years ahead.

Doug Benjamin

About the author

Doug Benjamin is Senior Vice President at MidWestOne Bank. He works in the retail department, specializing in checking and savings accounts, consumer loans, auto loans and home equity loans.

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