Your children have left home, leaving you with time on your hands to do the things you’ve always dreamt of doing. But first of all, here are three things you need to take care of.
Who are empty nesters?
Empty nesters are a varied group. Many are living with partners, but quite a few live alone. Some own their homes outright, while others are still paying off their mortgage, or renting their home. And while a few are only years away from retirement, many still have a decade or two to go.
But there are two things that they all share in common. Firstly, now that their children have left home their lifestyle will change — sometimes considerably. Secondly, most are starting to think more seriously about their retirement as it gets closer.
If you’re an empty nester, here are three things you should do to prepare for your next stage of life.
1. Pay down debt
Now that the kids have left home and are no longer your financial responsibility, you’ll probably find yourself with surplus income. Of course, it’s natural that you’ll want to spend some of that doing things like travelling or renovating your home. But if you still have a mortgage, paying this down (and any other personal debt) should be your priority.
Why? Because owning your home outright by the time you retire will mean your retirement income won’t need to go on paying interest that’s not tax-deductible, such as your mortgage or credit card debt. As you won’t be earning any more, it’s important that you make your retirement funds last as long as possible.
2. Review your insurance
If your kids are no longer dependents, you’ve paid off your mortgage or you’re only supporting yourself, you may need less insurance. However, if you’re still working, it’s not a good idea to cancel all your TPD, Trauma or Income Protection Insurance just yet. That’s because you are still depending on your income — so if you were to become seriously ill or disabled, you will still need this protection.
And, even if you no longer financially support your children, your spouse or partner may need financial support to cope if you were to pass away or become terminally ill. Life insurance can also help to cover expenses such as funeral expenses and any remaining debts you have. However, as insurance premiums generally get more expensive as you get older, it may be worth reviewing how much cover you really need.
3. Ask the experts
Being an empty nester can bring a renewed sense of financial freedom with fewer expenses and mouths to feed — but it’s important to use this time to put your money to work. To find out more about how to make the most of this stage of life, speak to your financial adviser today.