Navigate your empty-nest years to a vibrant, successful retirement

It’s bittersweet when the kids have moved out into the world of adulthood, but it’s also a unique time in your own life that’s full of potential.

Sending the last of your children out into the world can certainly be an emotional experience. And, while you’re adjusting to a quieter house, you’ll find that your empty nest years also typically mark an opportunity to accelerate savings for retirement.

During this life transition, there are some unique opportunities available to you. And, by taking advantage of them, you can prepare yourself personally and financially to enjoy those post-employment years.

Don’t make any big decisions.

If your kids have recently left the family home, you might be in the throes of empty nest syndrome. While not a documented medical condition, empty nesters contend with real feelings of nostalgia and even loss. Psychological experts recommend that you avoid making major life changes during times of transition, and financial experts advise against huge impulse buys.

What does that look like for you? Start by staying put, even if your inclination is to immediately sell your home and move to your kids’ new neighborhood. On the flipside, don’t rush the transition process by diving into a pricey remodel of your children’s old rooms. (Besides, many young adults return to the nest before they leave for good!) And don’t blow your money on big purchases you can’t afford in an attempt to fill an emotional hole.

Catch up on savings.

When your last child moves out, it can feel like an ending. But a newly empty nest may afford you a once-in-a-lifetime opportunity when it comes to your money. If you’re no longer supporting your kids financially or are providing only limited support, you’ll likely discover that your disposable income goes a lot further now.

The temptation at this point is to succumb to “lifestyle creep.” That is, you upgrade the quality and increase the quantity of material goods and experiences you purchase until that excess cash is wiped out.
Instead, consider using this unique time in your financial life to bank incredible savings:

  • Your bank account: Fill up your emergency fund to protect yourself and stave off debt.
  • Your debt: Accelerate the repayment of your outstanding debt. Eliminating the burdensome cost of high interest payments now can free up even more of your money down the road.
  • Your retirement: Take advantage of catch-up contribution limits for employer-sponsored retirement plans (like your 401(k), SEP or SIMPLE) and your own retirement accounts (IRAs and Roth IRAs). You’re likely eligible to sock away extra savings once you reach age 50.
  • Your health care: Consider investing money in a Health Savings Account (HSA) if you carry a high-deductible medical plan. An HSA allows you triple-advantaged tax savings on a lifetime of medical expenses.

Check your coverages.

Whenever you experience any kind of life change — including the departure of your last child — it’s a smart idea to assess the fit of your insurance policies relative to your new lifestyle.

Start with your health, dental and auto insurance coverages. If your kid is well-covered under his own plan, you can probably remove him from yours and save on premiums. Or you may be eligible for a discount if your child is partially covered by school insurance or living away from home while on your plan.

Second, take a look at your life insurance needs. Are your children still dependent on your financial support? If not, you may want to reduce the policy benefit amount. Or you might even cancel your coverage entirely if your spouse’s lifestyle would be financially unaffected by your death.

Finally, explore the costs and benefits of long-term care (LTC) insurance. Most financial experts recommend that you purchase a policy in your mid-50s if you determine that an LTC policy should be part of your financial plan.

Find a balance.

After being a parent in the trenches every day for decades, you should expect that adjusting to an empty nest will take some time and even some trial and error. The key is to discover and define for yourself what a balanced lifestyle looks like — how you can maintain a fulfilling relationship of equals with your children while devoting new energy to your own activities.

When it comes to the kids, consider scheduling regular communication. Knowing you have a weekly video chat or twice-a-week phone call can give you both something to look forward to while setting clear expectations on both sides. And find communication methods that work well for you and your adult children. That might be phone calls, texting, emails or even handwritten notes.

As for you as an individual, set some goals for your newly discovered free time. Now could be the perfect time to start that dream business or head back to school to prepare for an encore career. You may choose to join clubs or social groups or volunteer for a worthy cause. And, of course, you’ll want to carve out extra time to spend with your spouse, your friends and those incredible kids you raised.

Your newly empty nest marks a key period in your life between active parenthood and retirement. But the right plan can help you make the most of this unique transition period. And you can maximize these years to improve your finances, your family and even yourself.