If you have children, you know that being a parent makes you a very busy person! For most of us, the time-consuming nature of family life makes it difficult to stay on top of our financial plans all the time. When your last child leaves home is a perfect time to reevaluate your finances and make sure you’re on track for a secure retirement.
Here are five things every new empty-nester should do:
1. Update your retirement plans and fill in any gaps you may find. Evaluate your retirement readiness and update any part of your financial plan that will keep you from reaching your retirement goals. You’ll need to review your budget, your savings and how they are invested. Review your savings goals and determine how much longer you will work. Are any adjustments needed in your spending habits and investment strategies to reach your goals?
2. Review your housing needs. After your children are gone, think about how well your house will serve you in the future. Will you be able to afford property taxes and other costs as they increase? Do you have more house or yard than you will want to take care of when you’re older? If your current home is not one where you can age in place, it’s wise to begin the downsizing process now. Decluttering and getting your house ready for the market can take years and can be extremely difficult for you and your family if you put it off until a crisis forces you to take steps. Make sure you consult your accountant or financial advisor to understand the tax implications fully.
3. Plan for your long-term care needs. Many people are surprised to learn Long Term Care is rarely covered by Medicare. If your savings will not be sufficient, you will need to obtain insurance for this purpose, especially if you want to continue living in your own home.
4. Organize your important papers. Make sure your family will be able to find all the documents they will need in the event of your death or incapacitation. This includes your Social Security card, birth and marriage certificates, medical records, Medicare and Medigap policy information, car and property titles, loan documents, insurance policies, tax returns, and information on your retirement accounts. As you go through this process, review the beneficiaries on your insurance and investment accounts and make any needed changes.
5. Get estate planning documents in place. Review all your estate including your will, durable power of attorney, health care proxy, and living trust. Make sure the people who will execute these documents know about them and have access to them.
If you’re still relatively young when your last child leaves home, you may feel it’s a little early to worry about these matters just now, but don’t procrastinate. These steps are much easier and less stressful when you take them before you must. Having everything documented and organized will enable you to enjoy your newfound freedom with peace of mind, so you’ll be able to look forward to what the future holds.