Parents, brace yourselves for a shocking figure. The average family spends over $200,000 to raise a child up to adulthood, and that is before even thinking about college. For as many as 20 years or more, families focus financial planning almost solely around raising and caring for their children. Any remaining resources are generally spent on school or family activities, and creating other memories. For many people, this is the definition of the American Dream yet the clock ticks ever forward and one day, those kids will grow up. There will come a time when the nest becomes empty and although kids will probably always ask for money, couples are going to have to take a fresh look at their financial plan.
When the destination changes, it is time for a new map. Previous financial strategies will be rendered virtually obsolete with the shifts in spending. Savings, insurance protection, and financial goals can all be dramatically altered. Rather than shuffling around an outdated financial plan, a complete financial plan overhaul may just be the right solution. Empty-nesters have many opportunities to achieve new goals, dedicate more to retirement, and expand their wealth. See how others are finding ways to take advantage of this transition to achieve their goals.
Saving for Retirement
Depending on the individual, retirement savings and strategies range across the board. Once kids venture out on their own, it’s possible to contribute much more to IRAs, 401(k) plans, and other retirement savings vehicles. For some empty nesters, this may be the first opportunity to dedicate resources to retirement. The good news is, there’s still time to start saving for retirement. Investment opportunities, savings options, and more can help create a viable retirement plan. Speak to a financial advisor for more on taking a new look at your retirement planning.
Like the lifting of a curse, the kids are no longer your insurance obligation. For many parents, the reaction is mixed between joy and longing for the past but once the savings kick in, the transition becomes much easier to bear. Still, removing half or more of the covered parties from an insurance plan is more than a change, it’s a dismantling of the entire strategy. At this stage in life, it may also be important to think about insurance for long-term care or disability, or restructuring life insurance coverage. Health insurance requirements will be markedly different as well, necessitating a modernization of your entire insurance portfolio.
Planning your Estate
Any time changes in life affect income or spending, reviewing an estate plan is recommended. This helps ensure the strategies implemented are based on the latest information available. Once the kids are gone there are going to be some pretty big changes in saving and spending. This may be a good time to review trusts or consider starting one, take a look at future plans for savings accounts, and other opportunities.
Contributing a set amount to investments each month? With so many changes to family finances, there may be adjustments to make. Beyond changing contributions, it might be time to think about creating a new investment strategy altogether. There are many different avenues for empty nesters looking to invest. Talk to your financial advisor to schedule an investment review. Investment and savings decisions made 5, 10, or 15 years ago may be outdated in their approach and execution. Ask about your new options and opportunities for investing.
You’ve successfully raised your children, so get out there and reap the rewards. Speak to your financial advisor about creating a new financial plan based on your updated lifestyle. Travel, hobbies, and more are all very possible, even while living on a fixed income. Retirement may years in the future but that doesn’t mean you have to wait to start enjoying your new financial freedom. With the right financial plan in place, feel comfortable traveling and visiting family knowing it is already factored into the budget.
There are many different investment options and strategies available to suit nearly any empty nester. It’s never too early or too late to start thinking about your financial future. Have more time to enjoy yourself with an updated financial plan in place. Contact a financial advisor today and start creating the right financial plan for you. For more on financial planning, and for other intelligent financial insights, visit ProsperiFi.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.