Planning for an Empty Nest
Posted by on Aug 11, 2015 in
Seeing your children move out of the home they’ve always known might be a bittersweet moment in your life; there’s the satisfaction and joy of seeing your kids turn into mature adults, but also the realization of the passage of time.
With the youngest of the baby boomers now over the age of 50, there’s a huge portion of the population that, if not already, will soon become “empty nesters.” If you count yourself among that group, here are a few things to keep in mind to ensure smooth sailing going forward.
- Sit Down with a Financial Advisor. The best step that you can take in planning for life’s latter years is to meet with a financial advisor to discuss your options. For some people, the idea of being limited by a budget is unpalatable, so instead, think of it as planning for when the kids are out of the house. It’s an important way to make sure that your expectations of financial freedom are tempered with a dose of reality.
- Be mindful of unexpected expenses. One of the things that your financial advisor is likely to touch on is that even the best laid plans need some contingencies built in. Unexpected expenses can come in all sorts of forms: whether that be medical expenses and health care costs; long term care; or (gulp) kids eventually moving back in. Factor in some breathing room in any plan or budget you create.
- Consider the idea of downsizing your home. If you’re like many of us that are fortunate enough to raise a family in the National Capital Region, you probably raised your kids in a home that, after they move out, is suddenly feeling a little large (and empty.) There’s also the possibility that you’ve paid off a good chunk, or even all of your mortgage by then. If you’re confident that you won’t need all the space you once did, downsizing is a pragmatic financial option that many people start investigating after the kids are gone.
- Factor in some financial support for your children. For many boomers, the modern reality is that even after their children are out of the house, they’re still offering some level of financial support. Whether that’s some money towards a down payment on a house, or more regular support, many twentysomethings and thirtysomethings end up relying on “The Bank of Mom & Dad” more than anticipated. As best as you can, anticipate those costs that you may wish to contribute to for your children after they’ve left the house. As well, you may want to have a discussion when your kids are on their way out to set clear expectations in terms of financial support going forward.
- Make sure your insurance is in order. Although we’re extremely fortunate to live in a country with universal health care, you’re probably aware that there are gaps in certain types of coverage. Some level of supplementary health insurance may be a prudent investment. You should also speak to your insurance broker about life insurance options, which can provide several benefits for boomers easing into their retirement years.
- Don’t delay the discussion of your estate. It’s a discussion that nobody really wants to get into – but one of the most important ones that you can have. Putting together an estate plan allows for clear guidelines as to the dispersal of your estate and can ease a lot of stress for everyone in your family once it’s all taken care of – allowing you to live with a little more peace of mind.
