Yahoo Finance 8 Money Moves Empty Nesters Should Make Immediately
The moment your youngest moves out of your family home is an emotional time, to say the least. You’re dealing with enormous change while also thinking about the future.
Becoming an empty nester can be an overwhelming experience, but according to experts, you should also make some strategic financial moves right away.
“Empty nesters must immediately reassess their financial priorities and redirect resources previously allocated to child-rearing,” said Abid Salahi, co-founder of FinlyWealth.
Read below for the top money movies experts recommend taking.
Also see top items empty nesters should buy in retirement.
Trending Now: I’m Planning My Retirement: 5 Expenses I Wish I Had Cut Sooner
Learn More: The Surprising Way You Can Get Guaranteed Retirement Income for Life
Wealthy people know the best money secrets. Learn how to copy them.
Reevaluate Your Financial Goals
“As empty nesters, it’s time to revisit and update your financial plans,” said Justin Godur, finance advisor and founder of Capital Max.
With fewer immediate responsibilities, he said you can now focus on long-term goals like retirement savings, travel or starting a new venture.
“I always tell my clients to adjust their savings strategies and ensure they align with their new life stage.”
Ben Klesinger, co-founder and CEO of Reliant Insurance Group and Helping Hand Financial, also reevaluated his financial goals with his wife upon becoming empty nesters.
“With fewer expenses, we travel internationally once a year now,” he said.
“Experiencing new cultures and adventures is rewarding after years of focusing on family responsibilities,” Klesinger said. “The trip budget comes from funds previously spent on the kids’ activities and expenses.”
Read Next: I Retired in My 50s: Here’s My Monthly Budget
Maximize Retirement Contributions
At this stage in life, experts advise increasing your contributions to retirement accounts like 401(k)s or IRAs.
“I personally boosted my retirement savings significantly once my children were on their own, leveraging catch-up contributions to maximize tax advantages,” Godur said.
Experts agree that this period is perfect for catching up on any retirement savings gaps.
“When I became an empty nester five years ago, I was shocked to realize I had unknowingly spent an average of $14,000 annually on my children’s expenses,” Salahi said.
“I’ve significantly improved my financial outlook by redirecting these funds to my retirement accounts,” he said. “This personal experience has shaped my advice to clients in similar situations.”
Streamline Your Budget
Make sure to analyze and adjust your budget to reflect the change in household size. For example, redirect funds previously allocated for children’s expenses towards investments or debt reduction.
“In my experience, this reallocation can substantially improve financial health and free up resources for future endeavors,” Godur said.
Consider Downsizing
A big money move to start considering is the possibility of downsizing your home.
“A smaller home can reduce maintenance costs and provide a substantial cash influx,” Godur said. “When I downsized, it not only lowered my expenses but also gave me the financial flexibility to invest in other areas.”
Klesinger took a similar approach. “We downsized from a 5-bedroom house to a smaller home, investing the difference from the sale.”
He explained that the smaller home cut costs and the investments provided income and growth.
Revisit Your Investment Strategy
With a potentially higher risk tolerance, experts say to consider diversifying your investment portfolio.
“I shifted part of my investments to higher-yield opportunities, which has significantly increased my returns over the years,” Godur said. “Consulting with a financial advisor can help tailor this strategy to your specific needs.”
Pay Down Debt
According to Salahi, empty nesters should also aggressively pay down any remaining debt.
“Statistics show that [many] Americans aged 50-59 still carry mortgage debt,” he said.
By channeling newly available funds towards debt reduction, he said empty nesters can save tens of thousands in interest payments and enter retirement debt-free.
Klesinger similarly agreed that paying off the mortgage was a top priority for him as an empty nester.
“We accelerated payments to pay it off in 15 years instead of 30,” he said. “Eliminating that large monthly payment provides security and flexibility in our budget.”
Reassess Insurance Needs
Another critical move to keep in mind is reassessing insurance needs.
“Empty nesters often find themselves over-insured, paying for coverage they no longer require,” Salahi said.
By right-sizing insurance policies, he said individuals can save an average of $1,200 annually, which can be redirected towards retirement savings or other financial goals.
Update Estate Plans
“Empty nesters must update their estate plans,” Salahi said.
“A shocking 60% of Americans still need a will or estate plan,” he said. “This oversight can lead to significant legal and financial complications for heirs.”
That’s why it’s crucial for empty nesters to seize this transitional period to ensure their legacy is protected and their wishes are documented.
“These financial moves can dramatically alter an empty nester’s economic trajectory,” he explained.
By acting swiftly and decisively, they can secure a more comfortable retirement and leave a lasting legacy for future generations.
More From GOBankingRates
I'm A Self-Made Millionaire: 6 Steps I Took To Become Rich On an Average Salary
I'm a Boomer Who's Driven Dozens of Car Models -- These Are the 5 Best for Your Retirement Dollar
6 Things to Try This Week if You're Behind on Your Savings Goals
4 Reasons Retired Women Need More Money Than Men -- And What To Do About it
This article originally appeared on GOBankingRates.com: 8 Money Moves Empty Nesters Should Make Immediately
