Now that your child or children have either moved away to college or are otherwise out of the house, they are off your "payroll," and it’s time to refocus on yourself.
Focus on retirement
While it's easy to use the newfound time — and, quite likely, lower expenses — to pick up new hobbies or finally take that long-delayed vacation, it's also time to re-examine your budget and concentrate on your retirement savings.
If you have contributed little or nothing toward retirement at this point, it is more important than ever to start. Check into possible benefits from your employer, such as a 401(k) investment plan with corporate matching. If your employer does not offer retirement benefits, it would be wise to speak with a financial planner to learn more about IRAs and other investment opportunities to catch up on your savings.
If you have been regularly contributing to a retirement plan, now that the kids are gone, there might be more money available in your day-to-day budget. Based on your income expectations during retirement, evaluate your current total and see how much of your new savings can be repurposed for more retirement savings. You should be maxing out your retirement contributions through your employers, particularly if there is a matching program. Experts estimate you will need about 80 percent of your annual income during retirement, but it never hurts to have more!
Perfect your plan
Sit down and create more concrete plans and goals for retirement, such as:
- What age do you want to stop working?
- Where do you want to live?
- Do you want to work at all during your retirement?
Consider if this is the right time to move into a smaller home. You may not have to move to your final retirement destination just yet, but moving to a different home could be a wise financial move that helps you put more money into your savings.
It is also important to tackle any remaining debt. If you still have a mortgage, a credit card balance, car loans or even some lingering student loans, you should tackle them with any extra money that you're not putting toward retirement.
In the same vein, this might also be a time when you have to take care of your parents as they get older, so look at your budget and speak with them about their future plans. You should also consider getting long-term-care insurance so you can protect yourself from unforeseen crises.
Similarly, make sure you have adequate life insurance and disability insurance to protect yourself and your spouse.
To find out more about planning for retirement, visit our Retirement Center.