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5 Financial Planning Dos and Don'ts for Soon-to-Be Empty Nesters

Winter tires.

For soon-to-be empty nesters, celebrating the youngest child’s graduation party is an emotional moment. Coming home to a quiet house after years of hectic school, sports, and extracurricular activities can feel a bit unsettling and disorienting. At the same time, empty nesters have newfound opportunities to explore favorite hobbies, plan a dream vacation, change homes, or even move to a new city. In this time of transition, it’s important to reassess household finances.

Once the graduation party streamers have settled - and you’ve reclaimed dominion over the fridge and nightly TV schedule - set time aside for a financial planning checkup. Talk to your financial advisor and estate planning attorney to be sure you’re on track for your retirement goals.

1. DO re-evaluate spending priorities and your household budget.

With your children away at college or settling into their first jobs, your household spending habits will naturally change. Utilities and food expenses may be reduced now that you’re no longer feeding growing teens, doing 10 loads of laundry each week, or paying for sports or music activities. On the flip side, you may find yourself spending more on dining out, weekend getaways or travel expenses.

It can be helpful to take a look at your current spending patterns and re-evaluating your budget. Have savings on groceries or utilities been offset by restaurant meals or weekend travel? It can be tempting to go on a small spending spree with the extra money in your budget. Ensure you’re still setting aside adequate savings each month to meet your long-term financial goals, like buying a vacation home or traveling more frequently.

2. DON’T fail to set a limit on the financial support you’re willing to give your kids.

It’s natural for parents to want to help their children out when starting a first job, moving to a new city, or studying abroad in college. Just be clear in advance about this type of financial arrangement. Setting clear boundaries around the financial support you’re willing to give your kids is the best way to help your children grow into financially responsible adults. According to Money magazine, two-thirds of parents helping support their adult children provide them with at least $1,000 a year which could impact your retirement plans.

3. DO carefully assess home value before renovating.

Ready to finally say goodbye to that outdated kitchen or upgrade your old master bath? Don’t jump too quickly into a major renovation. Consider any renovations in the context of other long-term financial and personal goals.

Is your five-year plan to downsize or move permanently to your vacation home after retiring? Has your home increased steadily in value, or have market fluctuations wreaked havoc on your investment? According to PODS, it’s important to evaluate the cost of renovating your home if you’re planning to sell it soon, against its value.

4. DON’T postpone estate planning.

Talking about end-of-life planning can be an incredibly emotional and difficult conversation for both you and your loved ones. That said, postponing estate planning could leave your children or your spouse in a difficult financial situation.

Set time aside now to get your estate in order. The National Institute on Aging suggests you look into getting a will, power of attorney for your assets, and a health care directive. Next, organize all financial records, asset titles and beneficiary designations. Sit down with your children and explain where they’ll find these documents should anything unexpected happen.

5. DO revaluate retirement planning.

Once the kids are in college, retirement is the next major milestone most empty nesters will face. When raising a family, it’s natural to put your children’s needs first and your own retirement on the back burner. Take time to evaluate your current retirement portfolio. Is there room in your monthly budget to increase retirement savings? As noted in by Money magazine, a study found that empty-nesters spend over half as much when they’re kids have left home than when their children were living at home, illustrating how important it is to create and follow a retirement plan.

Some empty nesters enjoy spending their newfound free time getting more actively involved in investment strategy, while others prefer to leave the work to a financial planner. Whichever option you prefer, be sure you’re still on track to meet your retirement goals. Changing course now is much easier than finding out that you’ll have to delay retirement.

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