Financial Freedom After the Nest Empties: A Guide for Empty Nesters
From diapers to tuition, from school supplies to college room and board, you’ve invested your own savings to ensure a strong career outcome for your child. You’ve dedicated your time and resources to secure a prosperous future for your child, often putting them ahead of your own Retirement savings.
Congratulations! There are no regrets when we invest in our child’s health, well-being, and future. Unfortunately, according to the US Department of Labor, only about 51 percent of all private-sector workers are earning retirement benefits at work, and many lack a basic understanding of Investing.
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Many mistakenly believe that Social Security will cover most, if not all, of their retirement needs. In reality, Social Security has always provided a minimum foundation of protection. A comfortable retirement typically requires a combination of Social Security, employer-based retirement plan benefits, personal savings, and investments.
It’s worth noting that fewer companies are offering traditional Pension plans, and many contemporary retirement plans, like the popular 401(k), are primarily funded by employees, not employers. The inevitability of retirement is something we all face, but the real challenge is to determine your end goal for your retirement savings now, to ensure a comfortable retirement. Do you know what your target number is? Unlike parents’ responsibility to cover their children’s expenses as they grow up, it’s not the child’s responsibility to fund their parents’ retirement.
Whether you’re in your 50s or 60s today, it’s not too late. Let’s work together to create a budget and focus on your retirement savings. Here are some tips to get you started in the right direction:
Start by defining your ideal retirement Lifestyle. Do you want to stay in your current home or downsize? Do you dream of relocating? Will you Travel, volunteer, or pursue long-delayed financial goals and dreams?
Adjust Your Budget for a New Lifestyle:
a. List your current monthly expenses.
b. Explore adjustments to your budget and financial priorities now that your household expenses have changed.
c. Ensure you have 3-6 months of living expenses set aside in an FDIC- insured savings account for unforeseen needs.
Identify Your Financial Resources: Consolidate accounts if you have funds scattered across different banks or old 401(k), 403(b), or 457 accounts with former employers.
Boost Your Retirement Savings: Increase contributions to your retirement accounts. If you’re self-employed and lack retirement savings, explore the best options based on your business structure.
Tax Planning: Seek professional guidance on how to potentially reduce your tax liability, ensuring you don’t overpay the government.
Reevaluate Insurance Needs: Review changes in insurance coverage, such as life insurance and health insurance now that your children have left home.
a. Do you still need the life insurance you purchased when your children were young?
b. Verify the adequacy of your home and auto insurance.
c. Consider umbrella insurance.
d. Evaluate disability insurance.
Invest for the Future: Develop strategies to invest and grow your wealth in this new phase of life. Assess how your risk tolerance may have changed and review your investment portfolio for diversification and fee structures. Ensure you have proactive communication with your financial advisor, who should be experienced and knowledgeable about your retirement savings.
Estate Planning: Review your estate plan and Legacy considerations for your family. Ensure you have a comprehensive trust with essential components like an executor, successor trustee, and power of attorney. Don’t forget to have a health directive and a well-thought-out legacy plan in place.
Thank you for taking the time to read this blog on Empty Nesters “Financial Makeover.” I hope you found this post to be informative and valuable. The points addressed can significantly impact your financial situation.
Susan Alefi is a Registered Representative with LPL Financial. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
The Right Side of 40 is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Originally Published on https://deborahheiserphd.substack.com/
