Financially Preparing for an Empty Nest

Financially Preparing for an Empty Nest

Now that your kids are going to college or moving out to live on their own, it’s time to make some financial adjustments. Preparing for an empty nest involves reevaluating your financial priorities, which can include boosting your retirement savings, formalizing your will to better distribute your estate, paying for additional educational expenses, caring for aging parents and maybe even downsizing to a smaller living space. This time of your life can be liberating and stressful all at the same time. But have no fear, Ameris Bank is here to help you come up with a plan to financially prepare this next chapter in your life.

Distributing your Estate to Your Loved Ones

Planning where your estate will go (or who it will go to) is an important step in this process. If you don’t choose who it goes to, the decision will be made for you. And that decision most likely will not be favorable on your end. If you feel you have already checked this off your list when you first started your family, you may want to think again. Are all the people listed on your will still living and capable of making financial decisions? If you went through a divorce, did you update your will? Are there any family members you have now, that you didn’t have then (perhaps grandchildren)? All of these factors can be overlooked and can hurt you or the ones you love in the long run.

Paying for Kids Going to College

Depending on how early you started saving for your children’s college education, this step could be easy or difficult. However, it is never too late to get re-acquainted with the different options available. There are multiple ways to save money if you make the decision to assist your child financially with their college education.

  • Pay attention to the good loans (and the scam loans) that are there to help you afford education costs. Consider a Coverdell Education Savings Account (ESA) which is a trust or custodial account introduced by the United States government that allows families and individuals to set aside funds for qualified elementary, secondary, and higher education expenses.
  • Applying for federal financial aid is free and you must qualify in order to get approved. If you receive a sales call asking for a fee for this service, be wary and do your research because odds are, they are running a scam business for student loans.
  • Home equity can be a useful source of payment for college expenses. You may be able to access a Home Equity Line of Credit.
  • It may not be too late to start a 529 plan. This plan comes in two forms: savings and prepaid. The 529 savings plan is a way for you to make regular contributions so that by a certain date, you will have accumulated the amount of savings needed to pay for or at least make a dent in a standard college education. The other form of this plan is known as a prepaid tuition plan, which is only allowed in 9 US States including Maryland and Florida. This plan allows you to pay for college tuition at its current rate and carry that rate for the duration of your child’s education.
  • If you’ve built up debt, start working to reduce it to avoid carrying that into your retirement. Work to pay off your house, credit cards, auto loans and any student debt you may have agreed to pay for your children.

Empty Nest Downsizing

As you prep for your retirement, downsizing to a smaller home can help you save money. Making the switch to a more comfortably sized living space may be a beneficial decision for you financially, whether you plan to live alone or with your partner. An apartment or condo may minimize the amount of maintenance and landscaping you will have to keep up with during your retirement years, which may be an attractive option as you age.

You might also begin downgrading services that you no longer feel you need, for example a smaller internet service plan or lowering your data plan for mobile devices. This is a good time to look at your monthly bills and evaluate what you no longer need with less people in your home.

Preparing for Plan B: Aging Parents or Adult Children Living at Home

Life happens. Sometimes your children want to move back home while they save enough money to move on their own. Did you know that one in five parents over the age of 50 have at least one grown child moving back into their home? It’s important to be prepared for this, so if it does happen, your wallet isn’t blindsided.

Although it’s great to invite your adult children back into your home, it is also crucial to set boundaries so they can get back on their feet and become independent. To do this, you may want to charge rent, or ask your children to buy their own food or pay for certain expenses. You can also assist your children with setting up their own budgets to help them learn how much they should save towards their goal of financial independence. At Ameris Bank, we can help your children better plan their financial life so that they feel in control.

For many people, elderly parents may move in to be properly cared for. If you have aging parents that are running low on their retirement funds, can’t afford to live on their own, or have health issues, you may decide to move them into your home or help them understand their options for alternative long-term care. If they need around-the-clock care and their finances can’t cover the expense, this too will need its own spot in your budget.

Ameris Bank can assist you further if you need assistance with private banking, budgeting, paying for college, or other financial matters. We want your empty nest years to be more relaxing then stressful, because you deserve it! Contact us to learn more.

Published April 2024
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Information presented in the Financial Advice website is provided for educational purposes only and is not related to Ameris Bank's actual products or services. Ameris Bank makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Ameris Bank recommends you consult a professional for any specific guidance you are seeking.