Transitioning to an empty nest can be a significant and emotional milestone. With your children leaving home, you now have the opportunity to refocus on your own financial goals and aspirations. This phase of life presents a perfect chance to fine-tune your financial planning. Here are key strategies for empty nesters to consider, especially as you approach retirement and consider downsizing.

Reevaluate Your Retirement Goals

As empty nesters, it’s essential to reassess your retirement goals. With potentially more disposable income, consider whether your current retirement savings are sufficient to meet your retirement lifestyle goals. Review your retirement accounts, such as 401(k)s and IRAs, and think about increasing your contributions. Catch-up contributions are especially beneficial for those aged 50 and older, allowing you to save even more.

Steps to Reevaluate Retirement Goals

• Assess Your Savings: Determine if your retirement savings are on track with your goals.
• Estimate Future Expenses: Consider the type of retirement lifestyle you want to achieve or can achieve. This includes everyday living expenses, healthcare costs, travel, hobbies and more.
• Increase Contributions: Take advantage of catch-up contributions to boost your savings.
• Monitor Progress: Regularly review your retirement accounts to ensure they align with your risk tolerance and long-term goals.

Maximize Your Health Savings

Healthcare costs can be a significant expense during retirement. If you have a Health Savings Account (HSA), consider maximizing your contributions. HSAs offer triple tax benefits: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. These accounts can be an excellent way to save for future healthcare needs, HSA funds can even be used to pay for Medicare premiums.

Review Your Investment Strategy

As you approach retirement, it’s crucial to review and possibly adjust your investment strategy. A well-balanced portfolio should align with your risk tolerance and time horizon. Consider shifting towards more conservative investments to protect your savings from market volatility while still ensuring growth to combat inflation.

Diversifying your portfolio minimizes risks, and incorporating alternatives and fixed-income investments can provide stability. Conduct periodic reviews of your investment portfolio to stay aligned with your goals and make adjustments as needed.

Downsize Your Home

With your children gone, maintaining a large family home might not be necessary. Downsizing can reduce your living expenses, including mortgage payments, property taxes, and maintenance costs. Selling your home and moving to a smaller, more manageable property can also free up equity that can be reinvested into your savings long term.

Benefits of Downsizing

• Lower Expenses: Reduce housing-related costs and free up funds for other uses.
• Increase Savings: Reinvest proceeds from the sale of your home into retirement accounts.
• Simplify Life: Enjoy the ease of maintaining a smaller property.

Plan Your Estate

Estate planning is an essential aspect of financial planning for empty nesters. Ensure that your will, trusts, and beneficiary designations are up to date. Establishing a living will and healthcare power of attorney can make your wishes known in case of incapacitation. Proper estate planning secures your financial legacy and provides peace of mind.

Key actions include updating legal documents, considering a trust, will, power of attorney and and more. Work with a professional estate planning attorney to create a comprehensive estate plan that reflects your current wishes and financial situation.

Enjoy Your New Freedom

With the responsibilities of raising children behind you, take time to enjoy this new phase of life. Whether it’s traveling, pursuing hobbies, or spending more time with loved ones, make sure to budget for these activities. Creating a financial plan that includes your personal interests and passions will help you enjoy a fulfilling retirement.

Schedule a Consultation

Navigating the financial complexities of being an empty nester can be challenging, but you don’t have to do it alone. At Navalign, we specialize in financial planning for empty nesters, helping you plan for a secure and fulfilling retirement. Our expert advisors provide personalized guidance tailored to your unique situation. Contact us today to schedule a consultation and take the next step toward a confident and well-planned future.