Now that the kids have moved out, it’s time to take stock of your new empty nest and decide how to make sure it’s a comfy fit in the future.
Do you want to stay home more, get a vacation property, right-size your house, take flight and travel (after the pandemic), or do a mashup of all the above? Either way, you can count on spending more money and more time on yourself.
This is a well-deserved opportunity to re-examine your financial plan and goals. Take a glance back at what you’ve achieved, look forward to what you want and consider the present a gift to you.
Prepare to step into your new life stage. What do you want now?
Reassess your expenses
Without the kids eating at home, shopping, getting taken to activities with friends and all the other things that come with the hustle and bustle of their growing older, you can expect to be paying less for groceries, gas, heating and maybe vehicle insurance. Pretty much less daily on everything.
Let’s be honest, you’ll likely still be helping your kids out financially even if they’re no longer living at home. Keep in mind that this is another item you’ll need to factor into your financial plans. Wedding costs in Canada average more than $18,000. Student loans and house down payments, should your kids need help, can also be daunting.
Middle age is a time of transitions. While there isn’t a set age range for empty nesters, in Canada, more than 40 percent (5.1 million) of the population over 55 fits into the pre-seniors category. They have money to spend that may be curtailed to a degree by the rising threat of inflation, which you may want to factor into your calculations.
Even when considering these “what-ifs,” there is money on the table that you may not have seen before, as reports show that empty nest couples typically have considerably more discretionary income.
Update your budget
Either way, you’ll need to have money set aside or budgeted. This stage of your life can translate into spending power.
First step? Take a running total of your expenses over six months. You need to see what you’re spending, where it’s gone and now, where you want it to go towards. Adjust your budget and if you don’t already have one, get a budget and revise it according to your new situation.
While it may have seemed that money was flying out the door every time one of the kids stepped outside, you were silently accumulating wealth as you stayed the course with your investment plan.
Make sure your financial plan covers your needs
You must set the pieces of financial planning in place so that both you and your kids are taken care of should any unforeseen events disrupt your plans. Take some time to check in on your insurance and estate plans. You’ll also want to make sure you have an emergency fund, a long-term savings plan and a repayment schedule for any debt you might have.
This is also a great time to revisit your investment plan.
On the roadway to your retirement, your plan is the engine that gets you to where you want to go. Talk to your advisor about what works for you, as every empty nester’s situation is different. One size does not fit all.
In Canada, historical returns in the stock market have been strong in a way that has allowed empty nesters to make considerable gains when invested over, say, the past 20 years.
Once the needs are covered, you can focus on the wants
After the necessary financial components are in place, many empty nesters will consider splurging on dream purchases in their golden years such as:
- Renovating your home so that it’s shaped more to you rather than your kids.
- Indulging in a vehicle that better suits you.
- Increasing your home’s value or maybe turning your basement into a suite that can earn you some income.
- Buying a vacation property.
- Downsizing, right-sizing or otherwise moving into new accommodations that will carry you into the next phase of life.
- Travelling once the pandemic is behind us.
No matter what you choose, an empty nest means it’s time for your dreams to start coming true.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal advice.