Becoming an Empty Nester

The transition period between sending your kids off to college and approaching retirement can be difficult to navigate emotionally and financially.

  1. Potential Direct Financial Impact

    • Potential cashflow may be available to redirect toward goals from money spent feeding, housing and entertaining your kids.
    • Catch-up contributions to your retirement accounts may be necessary.
    • Possible need to balance mortgage (or other debt) acceleration with saving for retirement.
    • Any costs associated with funding college tuition and/or living expenses for your kid(s) out of pocket.
    • Potential costs associated with securing long-term care insurance and/or buying an annuity to create a fixed income stream during retirement.
  2. Potential Secondary Impacts

    • Potential lifestyle impact from the need to reduce expenses (and/or downsize) to save more and get on track for retirement.
    • Possible career change and/or return to the workforce if you left to raise your kids.
    • The need to plan for long-term health care costs and estate planning.
    • The need to evaluate stable sources of retirement income, like your expected Social Security benefits.
    • The need to re-evaluate your life insurance coverage and look into the remaining length of any existing term policies.
    • Possibility of cutting expenses that are no longer needed (ie. premium cable package, health insurance for your kid(s) if provided by their college or employer)
  3. Self Completion/Execution Risks

    • Inflating your standard of living once cash flow is freed up from your kids moving out of the house.
    • Sacrificing your own retirement at the cost of funding college for your kids out of pocket, when they can take out student loans.
    • Not paying off your mortgage (or downsizing) before you retire.
    • Not contributing enough to be on track for retirement.
    • Not taking advantage of the most tax-advantageous retirement vehicles
    • Not having an appropriate investment mix based on your objectives, risk tolerance and time horizon.
    • Not having a clear plan for when you what to retire and how much you want to replace each year during retirement.
  4. Situations where expertise adds the most value

    • Tax Adviser
      Consulting a tax adviser may be helpful to determine the optimal retirement accounts to minimize your taxes now and during retirement as part of your overall withdrawal strategy. Additionally, a tax adviser may be able to identify other tax-advantaged vehicles to contribute to for retirement purposes once you’ve maxed out your 401(k) plans.
    • Legal Adviser
      Working with a trust and estate attorney may be beneficial to set up estate planning documents and wealth transfer strategies to plan for future generations.
    • Financial Adviser
      Working with a financial adviser as you approach retirement is highly recommended to not only assess your retirement readiness, but also to put together a comprehensive financial plan that helps you balance any competing financial goals. Additionally, a financial adviser may be able to help you create an updated budget that enables you to save more each month.

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