Well, they've finally left the nest and now you're trying to get reacquainted with your spouse! The kids leaving home can either give you a great sense of freedom or leave you struggling to find other activities to fill in your time. Either way, it's the perfect time to review your financial plans and set yourself on course for the next stage of life.
It's important to do some planning around this stage, as it's also a time when we see many people making major financial mistakes. This can manifest in a few ways – either blowing the spending budget on lavish holidays or regular dinners out or finally launching into a major house renovation that unfortunately sets you back for years. Examine again what's important for you and plan a smart strategy to move ahead. Here are some tips to help with this phase:
1. Check in on the retirement savings.
Even though you'll feel like you can only just put your head above water now, consider how many more years you'll want to work for and what you'd like your retirement income to look like. It may be an ideal time to increase that salary sacrificing into super, and finally clear that mortgage once and for all.
2. Re-evaluate your cashflow
Now that the kids are gone, you probably don't even have to buy as much food! We'd always suggest looking at your budget at least every two years, so make it a priority to get clear again on what your living expenses are. This will help you determine what surplus cashflow you have and where it would be best to direct these funds.
3. Cut the money cord between you and your kids
While you'll always want to be there for your kids, you're not doing them any favours by continuing to pay for their expenses or to give them money. Give your kids the gift of financial independence and encourage them to take care of this area on their own. You also don't want to drain your own retirement position by having to pay for things that your adult children are now more than able to cover themselves. Stop doing their washing, buying them food or paying the phone bills – they can do it themselves now!
4. Reassess your insurance needs
Now may be a perfect time to reduce the amount of insurance you're holding if your family needs have changed. Insurance is not meant to be something you hold forever – it's a tool to ensure the family position is stable when an unforeseen event happens. If your asset position has improved, you may not need as much cover as you did once upon a time.
5. Check in on your estate plan
Now that the kids are grown up you may have noticed that some of them are more financially able than others. You may also want to name one or some of your children to act in estate roles, such as being a backup executor for your Wills or as a second power of attorney. Also, consider how much you may like to leave your children and what you need to do now in order to make that a reality.
Your transition from active parent to empty-nester can be a challenging one, but with smart financial moves to guide you, it can be a joyous one, filled with new opportunities and new challenges. And to help all of our clients in this transition phase we will be holding one of our Retire Right nights in the coming months. The Retire Right evening takes you through all of the areas you need to consider and provides you with a solid understanding of your options for investment, saving and retirement funding, so that you can live your future the way you choose and maybe leave a bit for the kids too!
If you would like more information on the next Retire Right night near you, register here.