The day has arrived where your children leave home. You officially join the ranks of being an empty nest parent! You might feel proud that your youngsters are setting out on their own. Maybe you and your spouse are looking forward to more freedom and privacy as you pursue the hobbies that matter to both of you. However, combined with all those feelings of new adventure are probably the mixed emotions of sadness and loneliness. No matter how you view the occasion when your kids leave home, it is time to start securing your retirement nest egg! Without the kids at home, you will have additional money that you can finally put towards your future.
Securing Your Retirement Nest Egg and Future
As a new empty-nester, it is time to take a step back and reevaluate your finances. You will want to find potential savings for your retirement. Within a few months of your last child leaving home, you’ll have an increased amount of money that you can contribute to your retirement savings (provided you are not paying a substantial amount of your children’s college costs).
Once the children leave the house, you have fewer mouths to feed, so it is an ideal time to start planning for your retirement savings.
A study conducted by the Center for Retirement Research at Boston College found that empty nesters might not be saving as much as projected. The average contributions to a 401k plan after the children leave home overs at only 0.3—1.0 %
Why Aren’t Empty Nesters Saving More?
The kids have left the house, so why aren’t empty nesters saving more? Even though the kids are gone, they are still regularly turning to their folks for financial support. In a study conducted by the National Endowment for Financial Education (NEFE), it was found that as many as 60 percent of kids who left home still need financial support from their parents. The ages revealed by the study were fascinating.; the ages of individuals still needing financial support from their parents ran from 19 to 39.
Suffering and Financial Security for Children
Almost half of the parents who regularly help their kids have voiced that their children cannot maintain financial well-being-without assistance. Many parents have suffered and do not want their kids to face the same hardships. The scale of their support ranges from help for housing assistance to medical builds, living expenses, transportation, insurance coverage, and monthly spending money.
Student Debt in Seniors
The high cost of student loan debt is another growing problem that might impact future retirement savings. Over 2.8 million people over the age of 60 carry student debt, so even those looking to retire who are finally empty-nesters might still be saddled with their own student debt before they can even fathom retirement.
The Balance Between College and Retirement
A study carried out by T. Rowe Price found that over half of all parents who participated believe that it’s essential to pay for their child’s college instead of saving for their own retirement. Most would rather help their kids with student loans than fund their retirement.
Despite such a passionate response about paying for college, most financial experts agree that parents must take a step back and find ways to prioritize their retirement savings.
Finding the Right Financial Advisor
You will want to find a financial advisor that you genuinely trust to take advice from. It is not always easy to save a particular way if your emotions as a parent get in the way, but you need to find a happy balance between paying off your child’s college and saving for retirement. You will need to sit down with your financial advisor to discuss your spending so you can find a way to save for retirement while your child’s needs. The financial advisor will help you discover what you are spending your money on and how to make the changes you need to save extra dollars for your retirement while still meeting your parental responsibilities.
Evaluate Your Living Needs
If your children have moved out, it is time to take a hard look at your living needs. Do you need a large house if it is just you and your spouse? When your kids move out on their own, it might be time for you to consider downsizing. Why not relocate to a retirement community? Move-in with a friend? Pick a smaller, easier to maintain residence? Relocating and downsizing can help you save a considerable amount of money for your retirement.
What to Do When an Adult Child Stays Home
In many cases, an adult child might not move out. Instead, for various reasons, the child will continue to live at home well into their 20s or 30s. However, once the child enters adulthood, it is time to ask the child to contribute to household expenses. Food, utilities, internet, laundry, and other services add up, so there is nothing wrong with asking a child to help to pay such bills so you can better save for retirement. Involve your adult child in budgeting, so everyone’s financial responsibility undergoes strengthening.
Many parents find that talking to their kids about money is an awkward experience, but once your child enters adulthood, it is time to step back and evaluate their mistakes and successes. Teaching a child financial education is a part of parenthood that cannot be overlooked.
Your Child’s Financial Future
As a parent, you want your child to take care of themselves well into the future. You want them to shoulder responsibility as an adult. Stepping back to focus on your retirement is not a selfish act but a way to present clarity to your child. Take the time to also walk your child through their own financial choices, so they understand what the future landscape looks like. You can even help your child focus on their retirement plan because it is never too early to get finances in order.
Securing Your Retirement Nest Egg
If you and your adult child sit down with a trusted financial advisor, you can discuss the future and how to secure your retirement nest egg. You want to create complete transparency for your financial goals so your adult child understands when and how you can help them and when you need to step back so you can better focus on your retirement nest egg.