For Mark Roberts’ Use: As adult children find jobs, move out of the family home, and begin building their own lives, parents often find themselves facing new opportunities. There are also numerous monthly budget items which can be re-examined after adult children leave the home. Empty nest couples may find themselves saving significant amounts by removing children from car or health insurance policies, for example.
With a smaller household to support, many empty nesters find themselves enjoying more disposable income for things like vacations, eating out, and luxury items. This is, of course, a normal human reaction to suddenly having extra income – not to mention the freedom of child-rearing coming to an end. However, many soon-to-be retirees begin enjoying lifestyles which they cannot actually support in retirement, leading to a feeling of disappointment after they quit working. A wise strategy would be to enjoy the empty nest years, while making smart decisions with extra income so that a fun lifestyle can still be enjoyed once the retirement years arrive.
Moving to a smaller home may be a good option for many empty nest couples. Generally speaking, a household without children can live comfortably in a smaller, less expensive home. Making this change can help many couples pay off their homes sooner in preparation for retirement. If the family home was already paid off, investing leftover equity after purchasing a smaller home can add significantly to retirement funds.
Extra disposable income can also be used to pay down debt such as college loans and credit cards, making retirement even more comfortable when the time arrives.
Making an appointment with a financial advisor as the empty nest period approaches can help couples to develop good strategies to manage extra income. While it is expected that most couples will want to begin enjoying their child-free years, careful decisions should be made about monthly income, paying down debt, and reinvesting extra money. The empty nest years can be enjoyed without creating an unsustainable lifestyle for retirement, and some of that extra income can be invested in order to build a more secure savings.