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MONTHLY INSIGHTS – SEPTEMBER 2023
Edelman Financial Engines
August 22, 2023


4 STRATEGIES FOR EMPTY NESTERS


HAVE YOUR KIDS LEFT HOME? TIME TO REFOCUS YOUR PRIORITIES.

The moment you’ve been working so long and hard for is here: The children have
flown the nest. It’s a huge achievement for all of you, even as the end of their
childhood can be bittersweet. It’s also an opportunity to refocus on your
financial goals and to make sure you have a plan in place that can see you
through to retirement and beyond. Let’s break down a financial planning road map
for an empty nester.

1. HAVE AN OPEN AND HONEST CONVERSATION WITH YOUR KIDS – AND YOURSELF

It’s important to set some guidelines around how much – and how long – you will
continue to support them financially. As parents, we want to care for our
children and help them as much as we can. But the best thing you can do for your
young adult children is to help them become financially independent. It doesn’t
have to mean cutting off all funds all at once, but depending on the child’s
age, living situation and employment status, together you can start to map out
what that path looks like. The goal is to get them on their way, so you can
start redirecting some money back toward your retirement. Which brings us to our
next step …

2. RENEW YOUR FOCUS ON RETIREMENT

Let’s be honest, kids are expensive. And now that they’ve moved out, that means
the money you’ve been spending all these years on tuition, clothing, food,
school trips or soccer uniforms can go back into the retirement pot.

If you haven’t been maximizing your retirement savings and the kids are out of
the house, it’s time to start.

 * Catch up: If you’re older than 50 and have a 401(k) or 403(b), you can make
   catch-up contributions to your retirement plan of up to $7,500 in 2023. The
   same is true for most 457 plans and the federal Thrift Savings Plans.
 * Review your investments: Your investment goals and risk tolerance can change
   over time. Check with a financial advisor to help make sure your portfolio is
   aligned with your retirement savings goals.
 * Develop an income withdrawal strategy: How much will you need to live on in
   retirement? What’s the most tax-efficient way to take withdrawals from
   retirement accounts like your 401(k), IRA or taxable brokerage accounts?
   Again, a conversation with a financial advisor can help you create a
   retirement income withdrawal strategy.

3. IS IT TIME TO “RIGHTSIZE”?

Without the kids living at home, you may want to consider “rightsizing” your
residence. The place may feel empty, or maybe it feels like too much work to
maintain it without those extra pairs of hands. Deciding to sell your primary
residence is a major decision, so discuss it with a financial advisor, if you
have one, to make sure you’ve got a clear picture of how this may affect your
financial situation. But if you do sell, part of the proceeds can be used to
boost your savings, pay for long-term care insurance or buy a more
retirement-friendly residence. If your new home is smaller, you might benefit
from lower utility costs, property taxes and insurance. Regardless of what you
decide now, the ultimate question of where and how you will live is an important
foundation of financial planning in your empty-nesting years.

4. HELP SAFEGUARD YOUR LEGACY WITH ESTATE PLANNING

As you enter middle-age and your children become independent, it’s time to
review your estate plan. Everyone needs an estate plan no matter the amount of
assets they have. The dual goals are to help protect your wealth and to provide
for your loved ones after you’re gone. This can be achieved by executing a will,
reviewing your insurance policies, identifying charitable causes you may want to
leave a legacy to, and having an open and honest discussion with your children
about your wishes. A financial advisor working with an estate attorney can help
create an estate plan that is financially comprehensive.

Above all, enjoy being an empty nester! Take the opportunity to discover new
hobbies, pursue new interests and maybe even continue your education using an
overfunded 529 plan. (Consult with a financial advisor on how you can do this.)
It’s a new chapter for you, and it’s time to focus on planning for the
retirement you want.

If you would like to learn more about retirement planning as an empty
nester, contact an Edelman Financial Engines advisor at (855) 224-1379, weekdays
from 9 a.m. to 9 p.m. ET. We’re here for you.

 

© 2023 EDELMAN FINANCIAL ENGINES, LLC. THIS PUBLICATION IS FOR INFORMATIONAL
PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT ADVICE OR AN OFFER TO BUY OR
SELL ANY SECURITY. FUTURE MARKET MOVEMENTS MAY DIFFER SIGNIFICANTLY FROM THE
EXPECTATIONS EXPRESSED HEREIN, AND PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. EDELMAN FINANCIAL ENGINES ASSUMES NO LIABILITY IN CONNECTION WITH THE
USE OF THE INFORMATION AND MAKES NO WARRANTIES AS TO ACCURACY OR COMPLETENESS.
FUTURE RESULTS ARE NOT GUARANTEED BY ANY PARTY. FINANCIAL ENGINES® IS A
TRADEMARK OF EDELMAN FINANCIAL ENGINES, LLC. ADVISORY SERVICES ARE PROVIDED BY
FINANCIAL ENGINES ADVISORS L.L.C. (FEA), A FEDERALLY REGISTERED INVESTMENT
ADVISOR. CALL (800) 601-5957 FOR A COPY OF OUR PRIVACY NOTICE.

 

INVESTING STRATEGIES, SUCH AS ASSET ALLOCATION, DIVERSIFICATION OR REBALANCING,
DO NOT ENSURE OR GUARANTEE BETTER PERFORMANCE AND CANNOT ELIMINATE THE RISK OF
INVESTMENT LOSSES. ALL INVESTMENTS HAVE INHERENT RISKS, INCLUDING LOSS OF
PRINCIPAL. THERE ARE NO GUARANTEES THAT A PORTFOLIO EMPLOYING THESE OR ANY OTHER
STRATEGY WILL OUTPERFORM A PORTFOLIO THAT DOES NOT ENGAGE IN SUCH STRATEGIES.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.

NEITHER EDELMAN FINANCIAL ENGINES NOR ITS AFFILIATES OFFER TAX OR LEGAL ADVICE.
INTERESTED PARTIES ARE STRONGLY ENCOURAGED TO INCLUDE YOUR QUALIFIED TAX AND/OR
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BEST OPTIONS FOR YOUR PARTICULAR CIRCUMSTANCES.

AM#3084196


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