The coast is finally clear. The kids have moved out of the house. Your home is officially an empty nest.
It’s not just your home that has opened up, though. It’s also your budget.
With dependents gone, your spending should drop — presenting an opportunity to ramp up savings as you close in on retirement.
The following tips will help you make the most financially of that empty nest.
1. Declutter the house
Look around the house you’ve been living in for decades and take a look at the clutter. Now, get rid of it.
Selling stuff can bring in extra cash immediately. Then, you can use the spare space to continue generating extra income.
Jason Speciner, a certified financial planner with Financial Planning Fort Collins in Fort Collins, Colorado, recommends using newly cleared space for an income-producing hobby or a business.
Another option is to rent it out to a full-time tenant or host the occasional traveler via a site like Airbnb.
2. Cut the cable cord
One more thing to declutter — your TV bill.
“Cut the cable your kids loved but you’re probably not watching anyway,” Speciner says.
Even if you do watch it, you can likely find your favorite shows through a streaming TV service for a fraction of the cost of traditional pay TV.
3. Sell a car
Have your driving needs changed? Can you get by with one car instead of two, or two instead of three? If so, sell the unneeded car.
You’ll pocket some money and save yourself thousands of dollars every year going forward. Owning and operating a car costs about $9,282 per year, on average, AAA says.
If you’re not ready to sell a car, consider renting it out through a service like Turo. You’ll recoup some cash that you can put toward all those operating expenses — or save what you earn or invest.
4. Remove the kids from your insurance
If kids no longer live in the house, they no longer need to be insured by you for car or health care costs. Also, this is a good time to reconsider whether you need to continue paying for life insurance.
The main purpose of life insurance is to replace lost income in the event of your death, enabling your dependents to maintain their standard of living.
If your children were your only dependents, you might be able to drop your policy. If fewer people depend on your income now — such as just your spouse — you might want to scale back your coverage.
For more, check out “Ask Stacy: Should I Drop My Life Insurance Policy?”
5. Drop the extra cellphones
Stop paying your adult children’s cellphone bills.
If you’re unsure what plan would be best for your newly emptied nest, check out Money Talks News’ free plan and phone comparison tool.
Who needs two-story hassles anymore? Downsize to a smaller home that fits your new lifestyle. How about one with the master bedroom and bath on the first floor?
A new home can also save you money — including upkeep expenses — if you shop carefully. You want a home that will give you the amenities you need for the next phase of your life while lowering your costs.
Sidney Divine, a certified financial planner at Divine Wealth Strategies in Atlanta, notes that downsizing can be especially advantageous for people who have built up a decent amount of equity due to living in the same home for a long time.
He says of clients:
“In some cases, they’re able to downsize without having a mortgage on the newer home. Other cases, there may need to be a mortgage associated with the newer home, but the savings from reduced costs — due to less square footage and oftentimes needing less things — ends up being a good source of additional savings.”
7. Redirect money to savings
Once you’ve freed up money that previously went toward expenses related to in-house children, redirect it to savings. Set up automatic transfers from your bank account to retirement accounts to ensure the money goes to the right place before you get a chance to spend it.
Not sure which type of retirement account is best for you? Check out “Confused by Retirement Accounts? Roth, Regular IRAs and 401(k)s Made Simple.”
Other smart options may include redirecting your freed-up money to pay off debt or build an emergency fund.
8. Buy financial planning for your adult child
One way to protect your nest egg is to teach your children to make good financial choices as you did.
Meredith Briggs, a certified financial planner with Taconic Advisors in Poughkeepsie, New York, recommends that empty nesters consider paying for a financial planning session for their adult children so they have a solid financial plan going forward.
“If kids can avoid the perils of credit card debt, buying too big of a house and not saving appropriately, it protects the parents from being the financial back-up plan.”
Would you add any tips to this list? Share with us by commenting below or on Facebook.
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