Many people look to the 'empty nest years' as a simpler time with fewer life obligations. As couples enter these years, the kids have usually left home, and retirement is just around the corner. In this new life stage, there are many opportunities to encounter new and exciting experiences.
A New Life Phase
When considering all of the important phases of life, it is essential to examine the financial strategy associated with each life stage. Young parents ponder ways to save for their children's' education and prepare for life emergencies like job loss or transfers. Parents of teenagers often wrestle with trying to cover the larger expenses related to the social activities of their children (cars, concerts, and camps).
These are only a few of the numerous financial conditions to review in light of an overall financial strategy. However, failing to plan for the empty nest years and how they impact a long-term financial strategy can leave a couple in an unfortunate situation.
Don't Get Caught Off Guard
With the children all grown up and on their own, there is still a lot to consider in the empty nest years. Your retirement savings plan may be in good shape, but that's only one aspect of a complete financial picture. It is vital to consider the extra needs that often arise during these years.
There's always the potential for extra medical expenses as one gets older, and this can be especially stressful if some or all of these expenses have to come out of basic living expenses.
After the children are gone, many couples dream of traveling to exotic destinations. Without proper planning for these types of new adventures, many couples find themselves dipping into their retirement savings earlier than expected. Oftentimes, retirement savings can help with some of the monthly bills, but there may not yet be enough capital to cover larger unforeseen or unplanned expenses.
Sometimes there is a desire to assist a family member with certain large expenses. Whether it's a wedding or a new first home, it is very tempting to borrow from a retirement fund to cover these unplanned expenses. However, spending retirement assets during the pre-retirement years can compromise the quality of a couple's retirement income plan and they may find themselves coming up short in later years.
A carefully considered financial strategy must include more than just the investing and debt elimination plans of the early years. To truly enjoy the 'golden years', one must prepare for the extra expenses that arrive just after all the kids leave home.