Vail Valley: Smart financial moves for "empty nesters"
Vail, CO, Colorado
use Financial Focus bug
It’s graduation time at colleges across the country. If you have children graduating from college, you’re probably excited about the opportunities that lie ahead for them. But once your last child leaves home, and you become an empty nester, you may also find some good opportunities for yourself – opportunities to improve your financial situation.
In fact, your empty nester status may help you make progress toward what are likely your key financial goals at this stage of your life: Getting rid of debt and accelerating your savings for retirement.
What steps should you consider? For starters, you could consider downsizing your home and moving into a smaller, less-expensive one. If you make a profit on the sale of your home, you could use it to invest for retirement and clear up debts. Of course, you may be emotionally attached to your home and neighborhood, but downsizing may be a good financial option to consider at some point.
Here are a few other suggestions for taking advantage of your empty nest:
• Max out on your retirement plans. If you now have money no longer needed for your children’s college education, use these funds to help save for retirement. Try to fully fund your traditional or Roth IRA, and put as much as you can possibly afford into your 401(k) or other employer-sponsored retirement plan. If you still have money available after maxing out on these accounts, look for other retirement-savings vehicles.
• Increase your investments for other goals. Up until now, part of your investment strategy – perhaps a large part – was aimed at building enough resources to help your children pay for college. Since that need has now been met, you may be free to boost your investments toward other goals, such as travel, a vacation home, charitable giving, funding for a small business you hope to operate after you retire – the list could go on and on. And since you are probably entering your peak earning years, you may be able to add substantially to the investments designed to help you achieve these various objectives.
• Reduce your credit card debt. If you have more disposable income available now, try to pay off your high-rate credit cards. By freeing up this money, you can save and invest more.
• Evaluate your insurance needs. When you purchased your life insurance, you may have gotten enough coverage to pay off your mortgage, send your kids to college and provide some retirement funds for your spouse. But if your kids are through school, your mortgage is nearly paid off and your spouse has accumulated some money in an employer-sponsored retirement plan, you may not need the same amount of life and disability coverage. Any money you can save on insurance can be used to help fund your IRA, 401(k) or other investments.
As an empty nester, you will miss your children, but you’ll also find that you have greater freedom to pursue your hobbies or other interests. And by taking the steps described above, you can help yourself move closer to reaching your financial objectives as well.
Charlie Wick and Tina DeWitt are financial advisers with Edward Jones Investments. They can be reached in Eagle at 970-328-4959 or in Edwards at 970-926-1728.
The Vail Valley’s real estate market has long been an unusual one, with very expensive sales accounting for a large share of the market’s dollar volume. That means a few sales can have a large impact on volume.