The transition to becoming an empty nester is a significant milestone, not just emotionally but financially. With your children now independent, your financial needs and priorities will change. This is the perfect time to reassess your financial strategy and ensure you’re on track for a secure future. 

When it comes to adjusting your budget, fine-tuning your retirement plans, or making decisions about your living arrangements, these shifts require thoughtful planning. That’s where the guidance of a financial advisor becomes invaluable.

The Empty Nest Transition: A New Financial Chapter

Becoming an empty nester brings a mix of emotions, but it also brings newfound financial flexibility. You may find extra room in your budget with a reduction in expenses tied to raising children—like groceries, clothing, and extracurricular activities. 

However, this doesn’t mean financial responsibility disappears entirely. Many empty nesters continue to provide financial support to their adult children, with 47% of parents admitting to providing an average of $1,384 a month. This ongoing support can affect your financial planning, making it essential to adjust your budget accordingly.

Reassessing Your Budget and Financial Goals

Now that you have fewer daily expenses related to your children, it’s a good time to review your budget. This is a great opportunity to allocate funds toward your retirement savings, pay off any remaining debt, or invest in personal goals and hobbies you may have postponed.

Even if you are still providing some support, your financial priorities may change once your children have moved out. If you’re nearing retirement, consider boosting your contributions to your retirement accounts. 

Evaluate your current retirement savings to determine if you’re on track to retire comfortably. It’s also a good time to consider long-term care insurance or other measures to safeguard your financial well-being as you age.

Should You Downsize?

As empty nesters, one common consideration is whether to downsize. When your children have moved out, the large family home might feel too spacious and financially burdensome. Downsizing can free up funds by reducing mortgage payments, property taxes, and maintenance costs.

However, not everyone finds downsizing the perfect solution. Some empty nesters prefer staying in their current home or upgrading to a property that suits their new lifestyle better—perhaps one that offers more room for hobbies, hosting friends, or even welcoming grandkids. According to the National Association of Realtors, 35% of people aged 66 or above bought a 3,000-square-foot or larger home in 2020.

Your decision on downsizing or not should depend on your finances, your desire for a new lifestyle, and the costs associated with moving. A financial advisor can help you weigh the pros and cons of downsizing versus staying in your current home. They can also assess how each option fits into your broader financial plan, ensuring that any move supports your long-term financial security.

Fine-Tuning Your Retirement Plans

Transitioning to an empty nest is an ideal time to fine-tune your retirement plans. You can focus more on your retirement with fewer financial obligations to your children. Review your retirement accounts to ensure they align with your current goals.

If you haven’t already, it's prudent to work with a financial advisor to develop a detailed retirement plan. Your plan should include a clear retirement timeline and an estimate of the funds required to sustain your preferred lifestyle.

This stage of life also presents an opportunity to diversify your retirement portfolio. Whether through IRAs, annuities, or other investment options, a financial advisor can guide you in creating a retirement strategy that balances growth with security. They can also help you determine the best time to draw on Social Security benefits to maximize your retirement income.

Estate Planning: Updating for the Future

As your financial situation changes, so should your estate plans. Now that your children are adults, ensuring that your will, trusts, and other legal documents accurately reflect your current wishes is essential. Estate planning is not just about money; it’s about ensuring your loved ones are cared for in the way you intend.

Review beneficiary designations on your retirement accounts, insurance policies, and other financial assets to ensure they’re up to date. This is also a good time to consider setting up a healthcare proxy or power of attorney to manage your affairs if you cannot do so yourself.

The Aligned Perspective: How Financial Advisors Guide Empty Nesters

Stepping into the empty nest stage can be tricky, but you don’t have to go it alone. A financial advisor can offer valuable support at every turn. Whether figuring out how to adjust your retirement plan or making big financial decisions, their expertise helps you sidestep common mistakes and make smart choices.

For example, an advisor can help you see the full financial picture and ensure the move fits your plans if you're considering downsizing. They can also guide you in balancing your retirement needs with any financial assistance you give your adult children.

As longevity increases, planning for those extra years is also important. A financial advisor can help you prepare for a potentially long retirement, covering healthcare costs and long-term care so you’re ready for whatever comes your way.