Most parents will tell you that providing the necessary financial and logistic support needed to raise kids and prepare them to launch out on their own can seem like more than a full-time job. Between school drop-off and pickup, sports team practices and games, musical or theater performances, other extracurricular activities, and finding time to oversee homework and maybe attend a couple of parent-teacher conferences, sometimes there are barely enough hours left in the day for minor details like work, meals, and sleep.
But the day eventually comes when they leave home—for college, marriage, technical training, the military, or some other major endeavor. The house gets quieter, the days less packed. The “empty nest” has become a reality. Some parents breathe a sigh of relief; others find themselves wistful for the childrearing days. Some may even become despondent, feeling a void that used to be filled with parenting activities and decisions.
Filling the Spaces
The emotional side of the empty nest should certainly be addressed. Probably most important is thinking ahead about how you’ll use the time that you formerly devoted to parenting. For parents who are still working, it’s important to maintain focus on your career, since these final years before retirement likely represent some of your peak earning years. It may also be time to reconnect with your spouse in new ways, now that you’ve got more time to focus on each other. For single parents who are empty nesters, it may be important to consider forming new relationships, if that is something you’ve been desiring. Parents who have chosen to stay at home with the children may want to consider entering or re-entering the work force. The key is to look for new purpose and meaning; this is probably the best antidote to the loneliness and “blues” that can attend the onset of the empty nest.
Don’t Forget Your Finances
There’s also a financial adjustment for empty nesters. Especially when the kids are finished with their education and embarking on their own careers, it may be time for you to reassess how you’ve been allocating your spending and saving. It’s not uncommon, even in households when both parents are full-time wage earners, for priorities like retirement savings to be put on hold in favor of braces, activity fees, college tuition, and other major expenses associated with childrearing. This can create a problem, especially when you consider the time value of money and the opportunity cost of failing to save during the years running up to retirement. In fact, a recent study by the Center for Retirement Research at Boston College found that many empty-nester parents aren’t saving as they should for retirement. Even though they may be spending less overall with the kids out of the house, they aren’t necessarily channeling those savings into their retirement accounts. In some cases, they may be working (and earning) less after the children are gone; in other cases, they may be funneling money formerly spent on the children toward paying down debt (which is not a bad idea). Finally, some may be continuing to support adult children—to the detriment of their future retirement lifestyle.
Keep Your Financial House in Order
Empty-nest parents need to keep in mind that with the kids on their own, it’s probably time to re-focus on making sure Mom and Dad are well prepared for their retirement years. After all, you aren’t doing your kids any favors by requiring their financial support during your retirement years. Instead, consider these strategies for making sure your “retirement tank” is topped off and ready for the coming journey.
Revamp your budget. Now that you’re not traveling to as many out-of-town athletic events, buying car insurance for young drivers, or paying tuition, it’s a good time to take a fresh look at where you’re spending your money. Can you shift more money into retirement savings? Can you shed some debt at an accelerated rate? The leaner you can make your monthly expenditures, the more flexibility you’ll have as you head toward retirement.
Maximize your retirement accounts. If you’ve got access to an employer-sponsored plan like a 401(k), 403(b), simplified employee pension (SEP), or others, make sure you’re contributing as close to the maximum as possible each year. If you’re 50 or older, take advantage of the special IRS catch-up provision that allows you to make higher annual contributions. Fund an IRA; you can contribute up to $6,500 in 2023, as long as you have at least that much earned income ($7,500 if you’re 50 or older). The sooner you get started funding those accounts, the sooner you’ll start enjoying tax-favored growth and compounding. Even a couple extra thousand dollars per year can make a big difference when compounded over a few years’ time.
Start looking at your Social Security options. If you’re healthy and able to work until age 70, you can maximize your monthly income benefit by waiting until then to begin claiming Social Security. If you haven’t already set up your free online account at MySocialSecurity.gov, you should do it now (for one thing, setting up your account makes it harder for identity thieves to falsely claim your benefits). Your account will enable you to check your earnings record, project your monthly benefit at various retirement ages, and access other helpful information.
Talk to your financial advisor. A fiduciary financial advisor can give you the benefit of an experienced eye and up-to-date advice as you design your “glide path” to retirement. With guidance delivered with your best interest foremost, they can help you structure your budget, savings, and investments to maximize your potential for a happy, low-stress retirement.
At Mathis Wealth Management, we work with clients to develop sound, individualized strategies for funding and transitioning into a satisfying retirement lifestyle. To learn more, visit our website to read our article, “Why Is Financial Planning a ‘Must-Have’ for Everyone?”