With back-to-school season in full swing, and kids settled on their own at college, parents can take time to focus on their own financial picture. Why is this an important time for couples to drill down on their financial plans? Today, people are delaying having children so there’s often an intersection with the final years of saving for retirement as kids head off to college—both large expenses to plan for. With kids out of the house, now is the perfect time for empty-nesters to address financial goals.
Don’t doubt yourself. If you’re behind with retirement savings, it’s never too late to get started. People’s biggest financial obstacle is often their own fear about being underprepared for retirement so they become paralyzed and continue to delay planning. It’s never too late to start and you can absolutely catch up on retirement savings, it just takes a plan to get there.
Create a plan. The solution to getting back on track and prioritizing financial goals is creating a plan. First things first, pay down any high-interest debt. Next, get an idea of expenses in retirement and understand how much you’ll need to supplement Social Security and other savings. Once you have a retirement cash flow plan in place, you can make an actionable plan to save the amount needed between now and retirement day.
Review your estate. Every new life stage and change in personal situation should warrant a review of the estate plan. As the kids are off doing their own thing now, parents’ lives change as well, so a review of what should occur if an accident happens can address those types of situations as well. Kids may not be able to gauge how to handle an inflow of capital from your estate and each child may be different than the others, depending on where they are in life, so it’s important to have an estate plan that reflects current circumstances.
Talk it out. For the last 18-20 years, parents have focused on raising their kids, but it’s time for the couple to focus on themselves and create a comfortable retirement. That may mean saying, “No,” to funding adult children’s lives. With a budget in place, parents can create boundaries and talk to their kids about what they can and cannot cover financially. Since this can be an emotional topic, we encourage families to come to the office for these discussions because for us, it’s not personal—we show children the numbers and it becomes a function of the plan set forth, not Mom and Dad saying, “No.” While your kids will always be your kids, they have to leave the nest at some point, and that’s when there’s more room to focus on your future as a couple.