When your youngest child eventually leaves home, it’s the perfect time to reassess your finances. It typically costs a family about $24,000 a year to raise a child. So, depending on the number of children who have left, this can be a significant amount of money. For many of us, the nest empties out when we’re in out mid to late 40s. That’s good timing because the peak earning period for many people is ages 45-55 and many people are able to save the most in their 50s and early 60s. Additionally, many families haven’t sufficiently invested in retirement savings due to the cost of raising children. But now, you’ll have more money available and this month we’ll look at some of the key financial adjustments you should consider at this important time in your life.
Retirement Savings. These are your peak earning years and you have lower child expenses. Perfect! Increase your 401(k)/403(b) and traditional or Roth IRA savings. These investments even let you save more with catch-up rules. In 2026, the standard 401(k) catch-up contribution limits for individuals aged 50 and older increases to $8,000. A special “super catch-up” of $11,250 applies to those aged 60-63. IRA catch-up contributions also begin at age 50 and are $1,100 in 2026. If you still have available funds after this, put them in a taxable investment. Most of us will need all of these resources in retirement. Another important retirement consideration is how you’ll pay for ever-increasing health expenses. Whether these funds come from savings or from some form of insurance, these costs are important and considerable.
Housing. Think about the size of your home. Maybe it was perfect for a family of five, but seems unnecessarily large for two people. If you want to downsize, it can free up significant amounts of money and probably lower your mortgage. Having said that, many people cherish continuing to live in the house where their kids grew up. It’s a choice.
Reducing Expenses. For many families, a great way to save is to free up cash by reducing expenses. This might be your mortgage, credit cards and student loans. This cash might also be funneled into your retirement savings. Maybe you don’t need as much life insurance at this point.
Estate Plans. Whenever there are significant changes in our lives, it’s always wise to revisit our estate plans. Do they still reflect your wishes? Have grandchildren become a factor?
Planned Enjoyment. It can be tricky to balance enjoying life now AND preparing to enjoy it in retirement. Nonetheless, it shouldn’t be all one way or the other. It’s truly a balance.
Supporting Adult Children. Naturally, there will be times when you will want to provide support for your kids. Just keep in mind that this is the time you must prioritize retirement, so you can accumulate enough money and so that it has time to grow.
Yep, that’s quite a bit to think about. If you’d like some help looking at this important life transition, or help with any other financial matter, we’d be pleased to meet with you in a no-charge, no-obligation initial meeting. Please visit our website or give us a call at 970.419.8212 to set up an in-person or virtual meeting.
This article is for informational purposes only. This website does not provide tax or investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Please consult your tax or investment advisor for specific advice.