6 Money-Smart Steps for Newbie Empty Nesters

By | July 27, 2017

Your children have grown up and left the nest. They’re out on their own, facing their own challenges of love, career, marriage, life and adventure.

But what’s next for you?

Many parents find themselves feeling aimless when their children leave the family home. They’ve been active parents for decades and suddenly find themselves without the money and time commitments that being an active parent entails.

What does that mean? What’s next? Here are six money-smart steps that fresh empty nesters should consider.

Make sure you’re on a strong path to retirement. This is the most important step. At some point, you likely hope to retire or at least transition into a “second life” in a different career path. How much do you need to be saving for retirement each year to make those goals happen?

Right now is the time to really ramp up your retirement savings. Your financial responsibilities are lower than they’ve been for a long time, thanks to the exit of your children. So, you now have the financial flexibility to start contributing a lot more without altering your lifestyle in any significant way.

Sit down with a good retirement calculator and work through the numbers in your current situation, remembering that your ability to save is better than it has been in decades.


Start minimizing any “financial outpatient care” that you’re giving. Many parents continue to give direct financial support to their children in the form of cash gifts well into their independent adulthoods. As tempting as it is to soften the path for them, it’s actually not helpful for them in terms of their preparedness for the future. Such “financial outpatient care” (which is a clever term for this type of support, coined in the book “The Millionaire Next Door”) doesn’t benefit them in terms of mastering true independence, and doesn’t benefit you as you save for retirement.

It’s time to start trimming those contributions. Start reducing the handouts now and set a deadline for a clean break. It’s a bad idea to do this suddenly, as your children may have made financial choices that make them reliant on the support, so cut it down gradually and be clear as to when the handouts will end. It’s time for your children to fly fully on their own, and you need that money to ensure a successful retirement.


Find healthy new uses for your time that don’t lead to a big increase in spending. Empty nesters often find themselves with a lot of extra time on their hands and lack a clear direction as to what to do with it, and often that turns into a “life crisis” of sorts, with the extra time and money being spent in incoherent fashion on travel and expensive hobbies.

Avoid that trap by figuring out truly meaningful uses for your newfound time. Look for charities or causes to give your time and energy to. Start a side business. Go back to school and take some classes. Get involved in a meaningful hobby that’s about doing things rather than acquiring things. Remember: The devil finds work for idle hands to do, so don’t let yourself be idle.


Reevaluate your life insurance needs. Now that you no longer have dependents, it’s time to take a fresh look at your life insurance. Do you have a term policy? Does it make sense to renew it? Do you even need a life insurance policy?

Everyone has a different life insurance situation. Spend some time evaluating what your real financial needs are before talking to an insurance agent. What are your needs in the event of your death? Of your spouse’s death? Are you adequately covered by retirement savings? Those are questions to carefully consider before listening to an insurance salesperson.

Consider other types of insurance, such as long-term care insurance and umbrella insurance. Long-term care insurance is intended to cover the costs of certain types of long-term care, which varies somewhat from policy to policy. It can help a great deal if you find yourself in a situation in which one of you needs long-term care beyond what Medicare can provide while the other partner is still healthy. Umbrella insurance is meant to cover expensive insurance situations above and beyond what other policies might cover and is usually used to protect the assets of wealthier individuals.

If you’re in either of these situations, investigate those types of insurance and see whether they make sense for you. Make sure you understand what situations you want to cover and the type and level of coverage you need before speaking to a salesperson.


Make sure you have a smart estate plan in place. One final piece of the puzzle to consider is your estate plan. What do you intend to leave behind for your children and grandchildren?

While it might seem early in your life to consider such things, you’re still better off asking these questions soon and getting your plans set in place. Who will manage your estate when you pass on? What do you want to leave to your descendants? What charitable gifts do you wish to leave? For a small estate, a simple will should suffice, but if you may have significant assets at any point before your passing, it may be worthwhile to consult an estate lawyer.

Your transition from active parent to empty nester can be a challenging one, but with smart financial moves to guide you, it can be a joyous one, filled with new opportunities and new challenges. Good luck.

This article was written by U.S. News Staff. View full article here.

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