At first, when the children have left home, it’s the psychological side of things that strikes you — the exhilaration of newly found freedom, or melancholy over missing your kids, or perhaps mixed emotions. But later, practical matters take over. Here’s a look at some common financial matters to consider once your nest has emptied.
The pros and cons of downsizing
With more house than what’s needed, downsizing is a common topic of discussion among empty-nesters. Downsizing gives you more money to invest for retirement and a smaller residence that’s easier to take care of. But moving is a big decision, and there are lots of factors and “what ifs” to take into consideration, so take your time. There’s no need to make a choice right away.
Envision your retirement
With the kids gone, now’s the time to focus on your own future. Envision what you want your retirement to be like, from where you’ll live to how you’ll spend your time.
We can help with the financial side, estimating how much you’ll need to fund your retirement lifestyle for the expected number of years. We can also help you make whatever adjustments are needed today to create the future you want, from increasing the amount you save to choosing appropriate investments.
Evaluate insurance needs
When your children depended on you financially, your insurance coverage provided financial security for them in case anything happened to you. Now that they’re on their way to independence, you may be able to scale back coverage that met this specific need.
Life insurance still plays an important role, however — preserving your children’s inheritance. Many empty-nesters opt for permanent life insurance, relying on the tax-free death benefit to offset taxes payable by their estate.
Review your estate plan
As your children enter their adult years, many of their life decisions can affect your estate plans. For example, if you own vacation property you were planning to hand down to your children, your plan may change if they relocate to another province.
Allow for the unexpected
The nest may be empty, but the doors may not have fully closed at the Bank of Mom and Dad. A child suddenly out of work asks for rent money. Or a child unexpectedly decides on grad school and now you’re tapping your Tax-Free Savings Account (TFSA) to help out. It’s wise to prepare for financial surprises, especially where your kids are concerned.
If your children have left home or an empty nest is on the horizon, be sure to come and talk to us. We can identify any financial planning changes relevant to your situation.