Make the most out of your empty nest

With their youngest son just a semester away from college graduation, Bryson and Leah Read of Austin, Texas, are ready to fully embrace their empty nest. While it’s been just the two of them at home for the past several years, their budget still accounted for college expenses.

“It will be nice to be able to focus more on our retirement goals,” Bryson says.

The Reads, who have three children, worked hard through the years to not only pay down debt—about $48,000—but also to stay out of it once it was eliminated. That meant some sacrifice.

“Because of our focus on planning for retirement and saving ahead to pay cash for used cars, we feel a little strapped in our daily expenses,” says Leah, a teacher for the blind and visually impaired. “We want to feel a little more leeway with our monthly budget.”

Bryson, who provides tech support for Dropbox, adds: “The last few years, we’ve purposely been cash poor so we can have a better lifestyle in retirement.”

Melissa Knippa, Thrivent wealth advisor in Austin, has worked with the Reads over the past decade to reinforce their financial position and develop a long-term roadmap that reflects their goals.

“It’s a time for parents to refocus their energy and attention from their children being the center of their world to realigning to their marriage and goals,” Knippa says. “This might be jarring for some, but it’s important. And it’s part of helping your fledgling become independent.”

Read on for some tips that may help you refocus.

Ideally, with the kids out of the house, you should see some freedom in your finances, says Tom Hussian, senior Advice Services consultant at Thrivent.

“This is the perfect time to ask, ‘What would we like to do, need to do or should we do with the money?’” Hussian says. “And then readjust your budget to fit those plans.”

While saving more for retirement likely is near the top of the list, what things on your bucket list may now fit into your monthly budget? Do you want to travel more? Pursue hobbies that have been put on hold? Do some home renovations?

“It’s a delicate balance figuring out how to do these things while getting some ‘super saving’ for retirement done,” Knippa says. “But these are important discussions to have, with each other and your financial advisor.”

If you’re planning to continue supporting your adult children, with insurance or other resources, Knippa recommends that couples keep open their lines of communication.

And don’t forget about addressing any debt you have as you rebalance your budget, says Shanell Foster, Thrivent financial advisor in Lake Worth, Florida.

“If we’re walking into retirement with debt, that adds stress on distributions from assets,” Foster says. “Now is the time to clear that up.”

With competing priorities (see article on page 14), you may not have saved quite as much for retirement as you would have liked. It’s time to review how much you have and the savings vehicles you’re using—and likely redirect some of your dollars into your retirement savings.

As a helpful metaphor, Knippa refers to the variety of savings vehicles as “animals in the barn.” “You’ve accumulated animals, and each was perfectly suitable when you got it,” she says. “But now they’re bumping into each other. We have to make sure your financial assets are working together toward where you want
to go.”

You’ll be looking for the most tax-efficient ways to increase your savings—for today, but also for when you will start withdrawing it in retirement.

Hussian also recommends increasing your savings to your emergency fund as well as to a “fun fund” for hobbies, travel or other wants.

Does your house feel too big or empty? Or maybe you simply want a change in scenery.

“This is when people start to consider if this is the house they want to stay in long-term or if there is going to be a shift to a smaller house or a move to a different geographic location,” says Cathleen Wenger, a Thrivent financial consultant also in Austin, Texas. “Sometimes an empty nest means you’re looking for a second home so you can be near grandkids.”

Real estate considerations need to be part of your discussions with each other and your financial advisor, Wenger says.

If you plan to stay put but want to do something with your extra space, Hussian suggests renting out a room, especially if you live in or near a college town. Or, if you have flexibility and want to travel, you could look into renting out your house for part of the year or doing a home exchange.

You may have purchased life insurance for yourselves when the kids were young. Review what you have in place and decide your next steps with your coverage.

You may consider converting a term policy to permanent policy, says Hussian, or even simply adjusting your permanent coverage. While life insurance is a tool that can provide financial security for your family when you die, it also can supplement your retirement income.

You may want to start looking at the options you’ll have for future extended care expenses, says Foster.

“If you’re looking at self-funding, that would involve naming dollars toward it,” Foster says. “However, long-term care isn’t just about finances; it’s also about communicating with your loved ones about the experience you want.”

The Reads know the struggles Bryson’s parents experienced because they didn’t plan financially for extended care. In collaboration with Knippa, they are creating their own strategy and considering how pre-existing conditions can change their choices.

“We’re already starting to self-insure through savings,” Bryson says. “We hope to be better prepared.”

This is a great time to review your legal documents—wills, financial and medical powers of attorney, trusts, etc. Also check that your beneficiaries are all up-to-date on your policies and accounts.

“Maybe you created the trust, but didn’t fund the trust or name a trustee,” Foster says. “Or your children are now more mature and responsible that you can name them on your documents.”

Talk to your kids about your documents, but also make sure they have needed documents in place, such as financial and health care powers of attorney and an advanced health care directive.

Your time was your kids’ time in the past few decades. Now it’s time for you.

“What passions are you going to pay attention to for deep meaning and fulfilment in your life?” Wenger asks.

Traveling, volunteering for causes important to you, hobbies, deepening relationships—these are all things you’ll want to enjoy while you can.

The Reads have embarked on their “retirement training program,” a term coined by Knippa, and have started to travel more.

“Every year we take a trip, mostly car trips to areas we want to visit,” Leah says. “And I don’t feel guilty because we’re training for retirement.”

Bryson adds: “For me, this is the most exciting time of life. It’s almost like being newlyweds again. It’s fun. We can reconnect on a level that when you’re busy raising kids, you can’t do.”

Maybe you have a boomerang kid—an adult child who has returned home. Consider these tips:

• Set boundaries and communicate responsibilities and expectations of what their contributions will be to the family, says Melissa Knippa, Thrivent wealth advisor in Austin, Texas. This could include helping with the cooking and household chores.
  
• Consider charging rent, says Shanell Foster, Thrivent financial advisor in Lake Worth, Florida. You may choose to save those dollars to return to them when they move out. But in the meantime, you’re teaching them financial responsibility.
  
• Encourage a part-time job if finding a full-time job is challenging, Knippa says.
  
• Make sure you give them space while also maintaining your own space for a good relationship, Foster says.

“We want to support, not undermine, their capacity to become independent and to learn to make good decisions about money,” Knippa says.

Thrivent financial advisors have tools and resources to understand your values and priorities and help you envision and plan for your future with confidence. They’ll be there through life’s twists and turns.