How Your Financial Plan Can Evolve in the Empty Nest Stage
Becoming an empty nester marks a significant transition. After years of juggling the demands of work and family life, you might find yourself with more time, fewer expenses, and the opportunity to reimagine your future. Along with the emotional adjustments, this stage presents a chance to rethink your financial plan to align with your evolving priorities.
Here’s how you may want to adapt your financial strategy in this exciting chapter of life.
1. Reassess Your Monthly Budget
With children out of the house, household expenses like groceries, utilities, and extracurricular activities often decline. This creates an opportunity to redirect those savings toward other goals. However, don’t overlook potential costs, such as supporting adult children through college or helping them launch their careers.
Action Step: Review your budget to identify areas where you can reduce spending and reallocate funds. For instance, you could boost your retirement contributions, start a travel fund, or pay down lingering debts.
2. Revisit College Costs and Support Plans
If your children are pursuing higher education, the financial responsibilities might not disappear just yet. From tuition to housing, you’ll want to clarify how much you’re willing and able to contribute.
Consider This: Have an open conversation with your children about financial boundaries and expectations. This can prevent misunderstandings and help you stay on track with your long-term financial goals.
3. Maximize Retirement Savings
The empty-nest years can be a prime time to focus on retirement savings. With fewer immediate expenses, you may have room in your budget to contribute the maximum allowed to retirement accounts like a 401(k) or IRA. Catch-up contributions (available for those 50 and older) can be particularly beneficial.
Why It Matters: The closer you get to retirement, the more important it becomes to make sure you’re on track. A financial advisor can help assess whether your savings rate aligns with your retirement vision.
4. Update Your Insurance Needs
The life insurance policy you purchased years ago might not make sense anymore. Similarly, with fewer dependents, you may find opportunities to adjust health, auto, or home insurance coverage.
Pro Tip: While your needs may shrink in some areas, consider whether long-term care insurance fits into your plan. With people living longer, these policies can help protect your savings from unexpected healthcare costs in later years.
5. Evaluate Housing Options
Your home may now feel larger than you need or want to maintain. Downsizing or relocating could free up equity and reduce expenses like property taxes, utilities, and maintenance. Alternatively, you may want to stay put and invest in renovations to create your dream home for retirement.
Ask Yourself:
Does it make financial sense to stay in this home?
Could selling now help fund your retirement or other goals?
Would relocating to a different area improve your quality of life?
6. Reevaluate Your Investments
Your risk tolerance or investment goals may shift as you transition into the empty nest stage. This is a good time to revisit your portfolio and make adjustments based on your retirement timeline, income needs, and risk preferences.
Example: If retirement is within a decade, you may want to reduce exposure to high-risk investments and focus on preserving capital. On the other hand, if you plan to work for many more years, you might maintain a more growth-oriented strategy.
7. Reflect on Your Legacy
With more time and clarity about your priorities, you may want to think about how you’d like to support causes or loved ones. Updating your estate plan, establishing charitable donations, or setting up education funds for future grandchildren can help solidify your legacy.
What to Review:
Update your will and beneficiary designations.
Consider establishing a trust for efficient wealth transfer.
Ensure your documents reflect your current wishes.
8. Plan for What’s Next
An empty nest doesn’t just mark a financial shift; it can also be a springboard for personal reinvention. Maybe you want to pursue a new hobby, travel, or even start a second career. Whatever your dreams, aligning your financial plan with your aspirations will set the foundation for a fulfilling next chapter.
Tip: Make a list of goals for this stage of life, then determine how your finances can support them.
Why Work With a Financial Advisor?
Navigating the financial opportunities and challenges of the empty nest stage can feel overwhelming. A fiduciary financial advisor can help provide clarity, prioritize goals, and craft a strategy. They can also serve as a sounding board for big decisions, such as whether to downsize or adjust your investment strategy.
The Bottom Line
The empty-nest years offer a chance to redefine your financial priorities and set yourself up for success in the next stage of life. By revisiting your budget, savings, investments, and goals, you can make the most of this new chapter—and align your finances with your vision for the future.
Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Granite Bay and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.