Posted by Chad E. Smith
As an empty nester, you’re probably experiencing a range of emotions as well as lifestyle adjustments. You’ve spent years providing for your children. However, now is the time to shift more attention to your own financial future—and make some important changes.
Here are some tips:
- It’s time to make saving for retirement a much larger priority. Most experts say you’ll need about 70 percent of your pre-retirement annual income to maintain your standard of living in retirement. If you haven’t put away enough, 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.
- Reassess how much money and space you need to live comfortably now that your children are out of the house. Consider whether you should stay in your current home, downsize to something smaller, or move to another part of the country. If you’ve built a lot of equity in your home, you may be able to contribute a significant amount to your retirement nest egg by selling and moving to a smaller home.
- 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.
- As you reassess your finances, consider not only your children’s needs but also the financial obligations of caring for aging parents or other relatives. You may decide you need to work longer in order to help both your children and parents. You might also consider working part time after retirement, both to help those dependent on you and to make it easier to maintain the lifestyle you want.
- Don’t forget to stay protected against the unexpected with life insurance. Talk with your insurance agent to make sure your current levels of coverage are adequate. Or call SBLI at 1-800-438-7254.
While becoming an empty nester has its emotional and financial challenges, it’s also an opportunity to refocus on your own interests and goals. Being informed and having a sound plan will help make the transition easier.