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Estate Planning | Tax Strategies | Financial Planning


Financial Planning: Your Empty Nest Needs Tending!

| September 30, 2019
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Your children have graduated from college and are off into the world of adulthood. Congratulations! Great job! All of those years of allocating portions of your finances to the various costs of supporting your baby have come to a close. Tuition? Done! Textbooks? They cost HOW MUCH?! No More! Meal plans? Complete! Your child is out in the world now, enjoying the benefits of her hard work, so it is time you do the same.  
 
Now that you have the place to yourself, your household spending habits will shift. You may now find yourself spending more on dining out, weekend getaways and the travel you once dreamt about, which is exciting! But, despite the constant barrage of advice, statistics, and encouragement to save a portion of annual incomes, the savings rate has been declining for decades. An alarming number of today’s 50-somethings are sending their children through college without being able to focus on their own retirement preparedness. Where do you stand? 
 
The textbook approach to retirement saving is straightforward: save a percentage of your income every year to put towards your retirement. The longer the time period, the more it can grow and compound. The higher the percentage you save, the faster you will reach your retirement goal. For example, if you are 25 years old, make $50,000 per year, save 10% of your income along with getting 3% per year raises for inflation, and save in a long-term aggressive growth portfolio that gets an 8% long-term rate of return, by the time you retire, you will have a whopping $2,000,000 retirement portfolio!
 
The key to retirement success does not have to only be about saving early and often. 
Saving a steady percentage of your income throughout the working years is not necessarily an unreasonable approach to retirement planning, but let’s face the facts, life with kids is chaotic, expensive and unpredictable. Having the opportunity to focus on saving post-college is a common path to retirement success. So, if you have not yet bulked up your retirement account, let’s get started! If you have already put some time and assets in, excellent! Either way, now is the time to schedule an in-depth review.
 
The good news is, transitioning into the empty-nest phase provides a unique opportunity for households to enhance their existing approach OR start to play“catch-up” for retirement by simply taking the money that was once being spent on the kids and saving it instead!   The empty-nest phase is the perfect time to re-evaluate your overall financial strategy. 
 
In just 15 years of saving 30% of your income and once the kids are out of the house, you can accrue enough for a large majority of many households to get or remain on track for retirement! To make sure you have a clear picture of your new and future financial health, are properly managing your current retirement accounts, and are still setting aside adequate savings each month to meet your long-term financial goals, such as buying a vacation home or traveling more, set aside the time to meet today.
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