Preparing for an empty nest: Financial and lifestyle tips

May 17, 2024

Becoming an empty nester comes with a mix of emotions. Taking the time to prepare for no longer having your children in the house can help you handle it more smoothly.

Becoming an empty nester is an emotional transition for many people. After decades of noise, activities and busy schedules, you suddenly find yourself with a quiet space and more free time than you may know what to do with.

It’s also a time that can mean shifting financial priorities, as you set your sights toward retirement and funding the next chapter of your life.

With a little preparation, you can make your empty-nest years more fulfilling, finding time to reconnect with friends and interests while making smart financial moves for your future. Here are some tips for how to handle this transition, reclaim some new space in your home and shore up your financial health.

What is an empty nest?

An empty nest refers to a household where the children have grown up and moved out, whether they’re headed off to college, a gap year of traveling or their own place. After decades of noise, activities, and busy schedules, this can be a jarring feeling for parents—one that provides a lot more time in your schedule and space in your home.

Handling an empty nest: Financial and lifestyle considerations

Watching your kids fly the coop can be an emotional experience. However, with a little preparation for your finances and any home renovation plans, you can enter this new phase of life with more enjoyment and less stress.

Fine-tune your finances as an empty nester

With your kids launching into adulthood, your budget may undergo a significant transformation. Here are five financial considerations as you embrace this new chapter.

1. Double check your tax dependents

If your children are in school full-time, you can still claim them as dependents on your taxes until they turn 24. If they’re not in school, you can only claim kids who are 19 or younger by the tax year’s end.

When you can no longer claim someone as a dependent, you may want to explore other tax deductions to recoup what you’re no longer saving. Consulting a tax professional may help you find other ways to save on your tax bill.

2. Re-examine legal documents and estate plans

If you haven’t updated your estate plan since the kids were little, now is a great time to review these documents and ensure that everything matches up with your current financial situation and desires. Here are a few key legal documents to fine tune:

  • Will. Having a will seems most important when your children are little, but it’s a smart plan to review this document now to ensure your beneficiaries and executor designations still reflect your wishes.
  • Power of attorney. If it’s been years since you’ve named your financial power of attorney, the person you’ve chosen may no longer be around or you might want to choose someone different. Make sure this document is up to date so that it reflects your current needs.
  • Trust. When your children were young, you may have put everything in your spouse’s name or into a trust for them to access at a certain age. Now that they’re grown, your needs may have changed. You may want to delay when they inherit the trust funds or consider a different type of trust. Speaking with an estate planning attorney can help you ensure these important documents are still accurate.

3. Review your life insurance policy

Many parents use term life insurance to safeguard their families until the kids are independent and out of the house. If you’ll be providing some financial support to your children when they’re out of the house, such as college tuition, life insurance can still act as a safety net for those costs or other expenses down the line like weddings or home purchases for your kids.

However, if you no longer have dependents who will be relying on you financially, it may want to redirect it to a long-term care plan.

4. Boost your retirement savings

Once you become an empty nester, it can be tempting to spend the money you previously budgeted for your kids in your day-to-day life: taking more trips, finding new hobbies or dining out more. Yet according to the Center for Retirement Research at Boston College, the majority of empty nesters aren’t saving enough for retirement once their children leave home.

It’s important to review your budget at this time, focusing on paying down any outstanding debt and then finding ways to cushion your retirement savings. Make sure that you’re still contributing enough to your 401(k), IRA or other investments to achieve the type of retirement lifestyle you’ve envisioned.

If you’re over 50, you also you get the bonus of catch-up contributions, which allow you to add more funds to your retirement plans. Starting in 2025, if you are between the ages of 60 and 63, you’ll have access to even higher contribution limits.

It’s also a good idea to boost your healthcare savings — if you haven’t already — through an HSA (Health Savings Account). HSAs let people on high-deductible health insurance plans set aside money on a pre-tax basis to pay for qualified medical expenses into retirement. It can be a smart way to save for healthcare needs in the future.

5. Set financial expectations with your children

The reality is that even when children are out of the house, there can be unexpected hiccups on the road to true financial independence. Many parents plan to help support their children financially in some capacity after they leave the home, whether that’s through funding their education or helping support them in a major purchase.

As your kids prepare to leave the nest, have an open discussion about what kind of financial support you can offer down the line, setting realistic expectations so that everyone is on the same page. For example, do you plan on helping them fund any expenses once they leave the home, or is the expectation that they will not rely on you for financial help? Being clear can help properly prepare your child for the level of financial responsibility they’ll need from the start.

Reconnect with your space—and yourself— as an empty nester

As you adjust to becoming an empty nester, you may find the family home could use some updates to fit your new way of living. In the process, this might involve repurposing rooms, renovating or even reviving some old hobbies and interests.

Build some empty nest house plans to spruce up your space to help you embrace this new empty nest chapter.

1. Declutter and free up space

With an empty nest house, this could be the right time to let go of unused furniture, books, toys and other items that have accumulated over the years. Plus, decluttering your home can have a calming effect and is a great chance to free up some room for new activities or hobbies.

Is a spare bedroom filled to the brim with old toys, clothes or other items? Maybe it’s time to reclaim that space for you, adding exercise equipment or turning it into a place to tackle personal projects. If decluttering feels overwhelming, consider hiring a professional organizer who can help you sort through your belongings.

2. Renovate and remodel

Once you’ve decluttered your home, you may find you have a host of new decorating ideas. When you live with kids, it’s easy to prioritize function over form, but if you’re alone or living with a spouse, there may be new designs or renovations you’d like to try.

You might even want to tackle a larger project and take out a home equity loan for a major remodel, like adding a guest suite with a bathroom or moving the laundry room from the basement to the main level. The right renovations can help you more comfortably age in place instead of needing to downsize into something more manageable as you age.

3. Get out, live large and rent out your home

If you plan to travel or live part of the year in another location, but don’t want to leave your home empty, consider renting it. This is a great way to add some income to your retirement or even fund those trips you’re taking.

To make the process as easy as possible, you can hire a property management company, so you don’t have to deal with the administrative aspects of renting out a home.

4. Consider downsizing

Many empty nesters choose to downsize, buying a smaller or less expensive home. Lower mortgage payments, reduced utility costs and fewer maintenance expenses could all result in significant savings and less hassle for you. Many condominiums provide services such as lawn maintenance and even on-site services such as dry-cleaning and housekeeping.

5. Rediscover personal passions

Without all that time spent carpooling and planning family activities, you may find you have a lot more time on your hands. By embracing this as a time to rediscover your passions and hobbies, you can enter your empty nest years with excitement. Whether it’s painting, exercising, reading or traveling, reconnect with the things you may have put off when the kids were little or passion projects you’ve always wanted to explore.

6. Reconnect with other relationships

An empty nest offers a chance to revisit and strengthen old and new relationships. This is a fabulous time to focus on nurturing your relationship with your partner, whether it’s by incorporating more date nights into your schedule or planning your next trip together.

You may also want to spend more time with friends, enjoying the personal freedom that comes from being able to make both longer-term and last-minute plans.

Embracing an empty nest

Becoming an empty nester can be a big change to manage and may come with emotional ups and downs. By using the strategies above and planning for what this change will entail, you can feel more financially and emotionally prepared to start this new chapter in your life.

There’s a lot of opportunities that come with an empty nest. Learn how we can help you plan and prepare for the future you’re dreaming of.

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