SBLI of Massachusetts
December 15, 2010
As an empty nester, you’re experiencing a range of emotions as well as lifestyle adjustments. If you’re helping children with college or other expenses, you may still have flexibility in your budget and with it, the opportunity to make some important financial changes.
Now is the time to shift more attention to your own financial future. While most parents want to help their children meet the financial demands of college, it’s important to keep in mind there are no scholarships or loans for retirement.
Here are some tips as you look ahead:
- Saving for retirement should become a larger priority. It’s important to reassess how much money you’ll need to live comfortably, whether that means staying in your current home, downsizing, or moving to another area of the country. If, for example, you’ve built a lot of equity in your home, you may be able to contribute a significant amount to your nest egg by selling and moving to a smaller home.
- To maintain your standard of living, most experts say you’ll need about 70 percent of your pre-retirement annual income. For those who haven’t put away that percentage of money, the IRS allows people 50 and older to make annual “catch-up” payments to their retirement accounts, even if they exceed the amount you can otherwise deposit without incurring extra taxes.
- Financial experts suggest getting credit cards and other debt under control. A plan to pay off debt will make it easier to plan for and maintain a budget as you get closer to retirement.
- For many, reassessing also means taking into account not only their children’s needs but possibly the financial obligations caring for aging parents. If this is your situation, meeting with a financial planner will be helpful in anticipating everyone’s needs as you adjust your retirement savings plan. You may decide, for example, you need to work longer in order to help both your children and parents. Another option is to plan on working part time after retirement, not only to help those dependent on you but also perhaps make it easier to maintain the lifestyle you want.
- Don’t forget to stay protected against the unexpected with life insurance. Talk to a life insurance expert to be sure your coverage is adequate.
Here are some helpful sites for helping you reevaluate and develop your new financial plan:
While becoming an empty nester has its emotional and financial challenges, it can also present new opportunities to finally enjoy more time for you. As with any new adjustment, being informed and having a sound plan will help make the transitions easier as you look toward retirement.