Becoming an empty nester can be an exciting time full of new adventures, plans, and goals. It’s also the perfect time to examine your finances and set yourself up for a stress-free retirement.
So as you prepare for this big life change, here are some key financial moves new empty nesters must make.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
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Review your budget
Kids can be expensive. According to a 2017 study by the U.S. Department of Agriculture, raising a child through the age of 17 typically costs more than $230,000.
When your last kid moves out, it should free up a decent amount of cash each year. Take this chance to review your budget and see where you can use that money to start investing or find other ways to maximize your financial goals.
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Meet with a financial advisor
Becoming an empty nester marks the perfect time to check in on your overall financial health.
Getting professional advice from a financial advisor might help you decide on the best ways to allocate your money during these last few years before retirement.
Consider downsizing your home
Now that fewer people are living in your home, you may be able to downsize and shed some of your expenses. Larger homes typically come with higher bills for lawn care, utilities, and property taxes.
Swapping your current home for something smaller might reduce these costs. If you've lived in your home for a while, you might even reap enough profit when you sell to put some extra money toward retirement savings.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
Use your extra savings to pay down debt
Reducing or eliminating your debt can put you in a better financial situation.
Whether you have credit card debt, medical debt, car loan debt, or mortgage debt, using your extra cash to pay off these balances will improve your monthly cash flow. Paying down balances will save you money on interest, too.
Start saving more for retirement
Here is some good news if you are at least 50: You can use catchup contributions to max out your retirement accounts.
The IRS limit on 401(k) contributions for 2024 is $23,000. However, those 50 or older can add $7,500 for a total of $30,500.
Once you have maxed out those accounts, you can still invest money in savings or other investment accounts to fund your retirement.
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End unlimited financial support to your children
Many empty nesters still financially support adult children, but this can put the parents’ own financial health at risk. So, it might be time to make a change.
Start by having a conversation with your children and mapping out how they can achieve financial independence. This may take some lifestyle adjustments or creative planning, but it will help them create their own financial security.
Once you have withdrawn financial support, you can direct that money to other places.
Start thinking about an estate plan
Now is the time to establish an estate plan. This plan should include your will, beneficiary designations, power of attorney, and any other information your family needs to know if you die or become unable to make decisions for yourself.
If you already have an estate plan, you probably need to update it now that you no longer have minor children living at home. It’s also a good idea to share your estate plan with your adult children to prevent any feelings of surprise or resentment after you die.
Set up — or bulk up — an emergency savings fund
An emergency savings fund should be kept separate from your other accounts. Consider using a high-yield savings account for this fund so you can earn a little interest.
The exact amount you need will vary based on lifestyle and expenses, but a good general recommendation is to save enough to cover expenses for three to six months.
Review your insurance needs
As your family dynamic changes, so does your need for insurance.
Take a look at your car, homeowners, and life insurance policies. You may need to change your coverage amounts or terms or update the beneficiaries. You might even save some money after making these adjustments.
Earn cash back on everyday purchases with this rare account
Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2
With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!
This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.
Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.
Reduce clutter and sell what you don't need
This is the perfect time to clean out the basement or crawl space and get rid of anything you are not using. Having a garage sale is always an option, but consider listing and selling in online marketplaces too.
If you have been keeping scrapbooks, collections, or other valuable memorabilia for your children, you can give it to them now to enjoy — and free up some space in your home.
Resist the temptation to splurge
Consider the long-term impact of your spending before you splurge by using your newfound funds.
Renovating the house or buying a shiny new sports car may sound great, but excess spending now could negatively impact your standard of living during retirement.
Account for extra expenses
There are plenty of ways that becoming an empty nester can help you get ahead financially. However, don’t forget about additional expenses that might pop up.
If your child formerly was helping with household chores, you may need to hire help to keep up with the housework. You may also need to increase your travel budget to account for weekends and holidays spent visiting your kids at their new home.
Bottom line
Financial advice such as “save more money” and “get out of debt” may sound unexciting, but these principles are helpful for many people, including empty nesters.
As you enter your golden years, you want to review your retirement plan. Parents often put their kids first, but now is the time to take your financial health seriously.
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