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Empty Nesters

Updated June 7, 2021

Brian Koopman CFP®, CPA, Chief Operating Officer

As you prepare for the kids to move out, you should also reevaluate your financial future

Brian Koopman CFP®, CPA and chief operating officer at Trust Point, is technically an empty nester—at least he was briefly. The father of five has grown children age 27, 24, and triplets who are 19. “What was interesting for us is that we were empty nesters for about three or four months, then COVID-19 hit and the triplets came home,” he says. Still, his own experiences combined with the work he’s done for many clients whose
children have moved out make him a great resource for those adjusting to the empty nester stage of life. He offers some key considerations for parents who have recently become empty nesters or will soon.

Don’t Rush Into It

“I would say it’s hard to plan too far out because life with kids is so busy,” Koopman says. “It’s probably when you’re 12 to 18 months from really being an empty nester that you should at least start thinking about it.”
Though it’s never a bad idea to be proactive, Koopman says empty nest planning is not the same as retirement planning, though the two are
related (more on that later). He advises parents to enjoy their time with
their kids and not rush into thinking of life after they’re grown up. It can also be an emotional process, especially when the reality of the child’s departure sinks in—coping with that is part of the process. “When you send your youngest kid away to college and they move away, you don’t know how you’re going to react or what the emotions are going to be until it happens,” Koopman says.

Plan Your Time

Once the planning begins, the first key step is to decide what you want to do
with your extra time, Koopman says. “When you’re raising kids, you’re going to sporting events, you’re going to dance recitals, you have school
events, they’re working, you’re driving them back and forth to things,” Koopman says. “And when they’re gone, you have that excess time and you need to decide what you want to do with that.” Talk to your spouse about what each of you envision—what are your goals? Whether you want to take up a new hobby, travel more, or even just eat out more often, lifestyle changes will come with financial implications that need to be considered.

Reevaluate Your Financial Plan

This is where the connection to retirement comes into play. If you’ve
created a financial plan in the past, now is the time to revisit that and see how it fits into what you want to do moving forward. A financial plan
encompasses many things, such as insurance, debt, and college support, just to name a few. If you don’t have a financial plan, now is the time to sit down with an advisor and take a deep dive into your financial resources and start thinking about your empty nest goals, retirement goals, and how you can get on the right path to achieving those. Take a look at your investments and adjust for your next phase in life. “Are you on track financially for all of your goals? Especially your retirement goals,” Koopman says. “Becoming an empty nester, in theory, may mean you have more disposable income because the spending goes down, you’re not supporting the kids as much.” Koopman says it’s also a good time to review your estate plan and update it if needed, or to meet with an attorney and get an estate plan in order if you don’t have one.

Reprioritize Spending

One of the first things you will notice as an empty nester is how your spending changes. You’ll spend less on groceries and utilities, but you might spend more on travel or dining out. Also consider expenses you might be able to drop, reduce, or change—TV, phone or internet plans, for example.
Revise your budget based on your new priorities, ensuring that you are still saving enough to meet those long-term goals. If you have increased savings, now is also a good time to pay down high interest debt, such as car loans or credit card debt. Taking care of those things will give you more flexibility down the road.

52% Are Back In the Nest

As in the case with Koopman, the COVID-19 pandemic has caused many
adult children to return to living with their parents—at least temporarily. In fact, as of July 2020, 52 percent of young adults aged 18 to 29 lived with their parents, according to a Pew Research Center analysis. Those numbers
have not been seen since the Great Depression. As uncertainty around the
pandemic persists, parents on the cusp of empty nesting might need to plan for a delayed flight.

Balance Support

“One of the big challenges that parents have is the sense of responsibility for their kids and continuing to provide support to their kids,” Koopman says. “And that is a balancing act.” You want to provide enough to your children to help them be successful, but you don’t want to enable them or train them to rely solely on your financial support. The cost of education
alone can take a big bite out of your plans as an empty nester or retiree if you don’t plan for it. Talk to your spouse about this and develop a game plan. Don’t be afraid to set limits and stick to them.

Have A Home Plan

Another big consideration for empty nesters is deciding where they want
to live. Koopman is going through this process now as it will soon be just him and his wife in a house intended for a family of seven. “Do we want to downsize? I’m not sure because we want a home that is large enough that as our kids begin to have families of their own we have a place where everyone can gather,” he says. Lifestyle, family, cost—your mortgage,
taxes and utilities—are all things you will need to evaluate. And if you’re thinking of doing any renovations, be sure to weigh the cost of those against the value of your home.

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Brian Koopman CFP®, CPA, Chief Operating Officer