Empty nester can feel like something of a misnomer when it comes to money. Your kids might have moved out, but you may be feeling the financial crunch more than ever if you have one child in college and even more so if there are two or more away at school and you’re also offering support to your parents. In addition, you may have only one or two decades of full-time work ahead of you, so it’s important to be smart about your financial choices at this stage of life.
Managing College Costs
There’s no getting around the fact that college is expensive. It’s so costly, in fact, that parents might be considering dipping into their retirement savings to help pay for it, but this is generally a mistake. Not only can it leave you in a difficult position if you lose your job but in general, it’s not a good idea to tap into your retirement savings for any reason. If you want to help your kids out and make sure that they are not saddled with a big burden of debt when they graduate, a better idea might be looking into a low-rate private parent loan. This allows you to take out a loan to help with their education and makes you responsible for repaying it instead of them.
Dealing with Parents
Ideally, your parents have been smart with their money, saved up for retirement, purchased long-term care insurance, and done everything else just right to ensure that they won’t have to deal with medical debt or run into financial problems later in life. Unfortunately, even those who do all the right things can have a run of bad luck, whether it’s job loss, ill health, problems with a company pension, or other catastrophes. How you respond to your parents struggling financially will vary depending on their needs and situation as well as yours. They may need a level of care that you aren’t able to provide, and they might have few enough assets that they qualify for government help in getting into assisted living. On the other hand, they may need someone to sit down with them, review their finances and help them make a budget, or you might be able to help them investigate services that are available for seniors.
Making Lifestyle Changes
This is a time when it’s common for people to make lifestyle changes. You may want to consider downsizing, or you might want to hang onto the family home for a few more years in case the kids move back home for a while, an increasingly common arrangement these days. If you have a family budget, it’s time to revise it; if you don’t, this can still be a great opportunity to look at your finances and consider whether you want to make any changes. You may still be supporting your kids to some extent, but if not, you may find a lot of cash is freed up. If you are over 50, you may be able to begin contributing in higher amounts to your retirement accounts.
