Investing as an Empty Nester - FAQ
Beginning the empty nest stage of your life can be a difficult time: both financially and emotionally. After spending years watching your children grow and investing in their futures, it's time for them to follow their own course. Now is the perfect time to reassess your financial situation and ensure that you're prepared for the next stage of your life-retirement. Below, the team at SII has compiled a number of questions that we frequently hear from empty nesters, as well as our responses. We hope that you find this FAQ section helpful; however, if you still have unanswered questions after reading through all of them, don't hesitate to contact your SII affiliated financial representative.
Where should I be in terms of retirement planning?
Preparing for retirement should be the utmost priority in your financial plan. Ideally, you should already have been preparing for this new upcoming stage in your life for years, and hopefully be at a place where you can keep saving and investing in your future. You will likely want to adjust your investments to make your portfolio more conservative. The empty nesters we work with tend to have around 10 to 15 years left before retirement, it's essential that you meet with a trusted financial advisor to ensure that your asset allocation is on track and you're making progress toward your end investment goals. For some, the empty nest life stage was the perfect time for them to go back to work, or put in more hours. This has allowed them to earn some extra money for savings, more income for personal enjoyment, and explore the new activities or personal pursuits.
How should I adjust my insurance coverage?
You are on your own again, so it's time to adjust any loose ends in terms of insurance coverage. If your children are no longer driving automobiles under your name or needing your health care coverage, make sure that you consult with your insurance agent to remove them from your policies.
What types of finances should I reassess?
Now that your children are moved out, it's a good time to reassess how much money and space you need to live comfortably. For many empty nesters, it's a time of deciding whether or not to downsize their home; emotionally, this decision is a difficult one, but financially, downsizing can allow for you to contribute more significant amounts to your retirement funds. Ultimately, it's up to the homeowners to decide whether or not they're willing to sell their current home for a smaller one. Many empty nesters instead decide to move to a retirement community, condo, or apartment. Even if you decide not to downsize your home or move to a different living space, consider downsizing your stuff, specifically expenditures that are no longer needed now that the kids are moved out. Downsizing will also allow for an easier transition into retirement if you and your loved one do eventually decide to move elsewhere.
What's my next step before retirement?
Before entering the retirement stage of your life, it's important that you focus on getting any credit cards and other debt under control. Creating a plan to eliminate these debts will make the process of budgeting and retirement planning much smoother. Your advisor is a great resource on debt management and can supply strategies to re-evaluate your budget.