It’s here: A concise, financial go-to guide with helpful links for getting key money matters in order for your retirement security.
As an empty nester – or anyone in the second half of life – you might be wondering if you’ve taken care of your different financial matters so that you can sleep well at night, knowing you’ve done all that you need in order to have a secure and enjoyable retirement. Do you have a financial plan that will work for you? Why is tax planning especially important at this point? Are you considering taking social security and want to learn the ropes with Medicare? Have you taken a close look at your different insurance policies and adapted them to this stage and your current needs? Have you done any estate planning? If you’ve wished for a clear-cut and easy-to-understand checklist for getting and staying on track with these kinds of things, you’ve found it here.
Empty Nest Network welcomes Ryan Malec, a financial expert and partner with Unified Investment Management based in Atlanta, Georgia. Ryan offers us what he says are the 10 most common financial topics his clients bring up with him at this stage in life. His streamlined checklist includes important tips as well as helpful links for your benefit. It’s always a good idea to review your situation and make sure you’re not overlooking something that can significantly affect the rest of your life.
Top 10 Retirement Planning Tips for Empty Nesters
– by Ryan Malec
As you enter what is often an exciting phase as empty nesters, a new chapter of important financial considerations unfolds before you. This pivotal time offers the perfect moment to reevaluate the different areas of your financial landscape, making adjustments that reflect your evolving lifestyle and long-term aspirations. Whether it’s optimizing your spending, creating or revisiting your estate plans, or understanding the nuances of Medicare and Social Security, each decision you make now can have profound implications for your future lifestyle and security. This checklist serves as your roadmap, guiding you through the process of looking closely at your financial habits and strategies. It’s crafted to assist you in reassessing your financial priorities, ensuring that every choice you make is informed and aligned with your goals for a comfortable and fulfilling retirement. By proactively addressing these key areas together with your spouse you can set the stage for a retirement that’s not just financially stable but one that allows you to live a richer life with peace of mind.
1. Reassess and Optimize Your Spending as New Empty Nesters
Becoming empty nesters and transitioning into the second half of your lives is an opportune time to take a fresh look at your spending habits. Given that you’re likely in your prime earning years, this phase offers the dual benefit of potentially higher income and lower expenses. With the kids now graduated and on their own journeys in life, several expenses that were once deemed essential might no longer be necessary. For example, you might find you’re spending less on things like groceries, clothing, phone bills, transportation and allowances for the children, not to mention the end of tuition expenses.
This is an excellent time to amplify your financial objectives. Redirecting surplus funds towards enhancing your retirement savings can significantly impact your future financial security and any potential legacy aspirations that you have for your loved ones. Alternatively, you might choose to address debt reduction now, easing future financial burdens and paving the way for a more relaxed and secure retirement. A well-thought-out strategic reallocation of your excess income not only capitalizes on your current financial advantages, but also sets a solid foundation for your golden years, ensuring that you make the very most of this unique time of financial transition.
If you don’t already have a financial plan, now is the time to create one so it will serve as your financial roadmap. Resources to help you develop a financial plan:
- Most advisors have wonderful software that can help develop a plan that’s customized for your family. Ask your advisor what planning solutions they offer.
- If you do not work with an advisor, there are plenty of online budgeting tools to help you develop a plan. A good example would be this free, do-it-yourself budget worksheet from NerdWallet: Free Budget Planner Worksheet – NerdWallet
2. Tailor Your Tax Planning
With the recent shift in your household size, your tax landscape can undergo significant changes as well. It’s crucial to examine how your combined retirement income—including Social Security benefits, pensions, and distributions from retirement savings—will be subject to taxation. Changes such as the loss of dependent-related tax credits can also influence your tax obligations. Moreover, if either you or your spouse is contemplating a shift to part-time work or adjusting your retirement contributions, these decisions could further impact your taxable income. I strongly advise all my clients to work with a tax professional who will analyze your situation and help you navigate these complex issues. A qualified CPA can identify potential tax benefits or liabilities to help you tailor your tax strategy so it effectively supports your mutual retirement aspirations and avoids common pitfalls.
3. Adjust Your Insurance to Reflect Your Current Needs
Your insurance needs are also likely to evolve at this stage of life, reflecting the new dynamics of your household. You and your spouse will need to reassess your insurance portfolio to ensure it is in sync with your current circumstances. For instance, you might consider adjusting any life insurance coverage if your dependents are now financially independent, potentially lowering your premiums. Similarly, evaluate your health insurance to see if a different plan might be more cost-effective or better suited to your stage in life. Your auto insurance could be adjusted too, especially if you’re driving less or no longer have teen drivers and extra cars on your policy. Reviewing your home insurance is also very important; if you’ve downsized or no longer have children at home, you may not need as extensive coverage as you did before.
Additionally, this transition period is an opportune time to research long-term care insurance or design a plan with your advisor to self-insure with savings. This can be a strategic move to safeguard your future while avoiding the trap of paying for coverage that doesn’t match your actual needs.
Consult with your insurance agent on household changes to ensure that each policy is not only cost-efficient but also adequately supports your lifestyle as empty nesters.
4. Create or Update Estate Plans to Reflect Your New Life Stage
Now is also the time to create or revisit your wills, trusts, power of attorney documents, and healthcare directives so that they reflect your current wishes and family structure. This update is crucial for easing the transition of your legacy and ensuring that your assets are distributed according to your mutual desires. Working with an estate planning professional can provide great peace of mind that comes from knowing all of your documents are in order.
Engaging with an estate planning professional is not just about updating documents; it’s an opportunity to reassess your entire estate strategy. As children marry and the prospect of grandchildren becomes more likely, grandparents might want to include provisions for grandchildren in their estate plans. This could involve setting up gifts or inheritances bequests for grandchildren, or establishing a lineal trust that will include them.
Reviewing your power of attorney documents is also highly important now; you may need to adjust whoever has the authority to make decisions on your behalf if previous appointees are no longer suitable or available to handle your affairs if you are unable to do so. Such a comprehensive review ensures that your estate plan accurately reflects your current life stage and protects your legacy, so that your assets will be distributed as you intend.
5. Focus on Debt Reduction to Enhance Your Financial Freedom
Prioritizing debt repayment, especially high-interest debt like credit cards, can significantly impact your retirement readiness. The goal is to retire free of debt. If a debt-free retirement isn’t possible, consider developing a plan with an advisor who focuses on accelerating debt repayment. Once any debts are under control, allocating extra cash flow towards retirement savings or lifestyle enhancements can be a balanced approach to enjoying your new phase of life while securing your financial future.
Reducing debt before entering retirement is a strategic move that can pay big dividends in the way of financial peace and flexibility. When you’re not tied down by monthly debt payments, your retirement income stretches further, allowing you to enjoy the fruits of your labor without the added emotional drag of debt obligations. A joint, proactive approach to debt management can significantly enhance a couple’s quality of life, offering you the freedom to pursue hobbies, travel, or simply enjoy your time with less stress.
An advisor can help you create a customized debt reduction strategy that works for your unique financial situation.
6. Review Your Retirement Savings
Reviewing your investment portfolio and having a solid financial plan are critical steps in ensuring financial security during your golden years. Similar to an annual health checkup, a portfolio review with a financial advisor ensures that your financial health is on track. This allows you to adjust your investment strategies based on changes in your life, or the market.
Understanding risk, asset allocation, and their roles in diversifying your portfolio is key. As you near retirement, adjusting your investment mix to more conservative options can help protect your capital, considering the reduced time frame to recover from potential market downturns. Every dollar should be earmarked for a specific goal and invested accordingly. Monitoring your financial plan is an ongoing process that adapts the plan to life’s changes, so that you stay on track towards your financial objectives.
By staying engaged with your investment strategy and making informed adjustments as necessary, you can better ensure that your retirement savings are well-positioned to support your desired lifestyle in retirement.
7. Master Medicare and Supplemental Insurance Plans
Healthcare planning is also crucial leading up to and in retirement. Navigating these choices together ensures that both you and your spouse are adequately covered and understand your healthcare planning. To get a head start, you will each need to familiarize yourselves with the different parts of Medicare: Part A covers hospital insurance, Part B covers medical insurance, Part D provides prescription drug coverage, and Medicare Advantage Plans (Part C) offer an alternative way to receive your Medicare benefits.
Start by visiting the official Medicare website (medicare.gov), which offers comprehensive information and resources to help you understand your options. You can also check out the Social Security Administration’s website, as enrollment in Medicare is often tied to Social Security benefits. For personalized guidance, consider contacting your State Health Insurance Assistance Program (SHIP), which provides free, one-on-one counseling about Medicare, or a trusted insurance broker/agent can guide you. By educating yourselves and planning ahead, you and your spouse can make informed decisions that best suit your individual health care needs as you approach this new chapter of your life.
Resources to help you better understand Medicare Costs and Coverage Options:
- Welcome to Medicare | Medicare
- Plan for Medicare | SSA
- Home | State Health Insurance Assistance Programs (shiphelp.org)
8. Understanding Social Security
If you’re in your early 60s and have earned the Social Security Administration’s required number of work “credits” by this point, it’s an excellent time to start planning for Social Security benefits, which can form a very important part of your retirement income. Social Security benefits are based on your earnings history, and you can start claiming them as early as age 62, although waiting until what the SSA calls “full retirement age” (which varies depending on your birth year) or even until age 70 can significantly increase your monthly benefits. To prepare, first create a “my Social Security” account at the official Social Security Administration (SSA) website (ssa.gov). This account allows you to view your estimated benefits at the various “retirement ages”, check your earnings record, and access various helpful and user-friendly planning tools. Understanding the impact of different claiming ages on your benefits can help you make an informed decision. Additionally, consider consulting with a financial advisor who can help you integrate Social Security into your broader retirement strategy. For more detailed information, the SSA’s website offers publications and calculators, and you can also attend Social Security workshops or webinars to deepen your understanding.
The United States Social Security Administration | SSA
9. Explore Tax-Efficient Gifting as a Couple
If supporting loved ones or charitable causes is important to you, understanding the intricacies of gift tax laws is essential when giving substantial gifts to avoid unexpected tax implications. In 2024, the lifetime gift tax exemption is $13.61 million per individual, allowing you to give this amount over your lifetime without incurring gift taxes. This exemption doubles for married couples to $27.22 million. However, it’s important to note that this exemption is set to decrease significantly, to roughly $6 million per individual after 2025.
In addition to the lifetime gift tax exemption, there is also an annual gift tax exclusion to keep in mind. The annual gift tax exclusion for 2024 is $18,000 and applies to each person you give a gift to. This means that you can give up to $18,000 to as many people as you want in a given calendar year without it impacting your lifetime gift tax exemption. If your gifts exceed the annual exclusion, you must report them to the IRS, and it’s advisable to consult with a tax advisor to navigate these rules effectively and make informed gifting decisions.
Gifting money to children and grandchildren while you are alive can provide significant benefits for their future. One of the biggest advantages is that it allows you to see the impact of your gift and how it helps them, whether for education through a 529 Plan, a down payment on a home, or a head start on saving and investing. Gifting also reduces the size of your eventual taxable estate, potentially minimizing estate taxes owed after your passing. Simply wanting to share your resources with family during your lifetime when you can witness the difference it makes in their lives can be immensely rewarding.
Lastly, it’s important to consider the tax implications of any donations you make to charitable organizations. A charitable donation is a gift of cash or property that you make to a nonprofit organization you are passionate about.And those donations can be deducted on your federal tax return if you decide to itemize your deductions.
10. Stay Engaged and Informed, Together
Finally, I can’t emphasize enough the value of creating a shared financial vision with your spouse. Open and honest discussions about financial goals and challenges not only enhance mutual understanding, but they also contribute to a stronger, more aligned and harmonious approach to managing money. This collaborative process is particularly vital for empty nester couples as they prepare for retirement. It offers an opportunity to reassess financial goals and ensure that both partners’ dreams and concerns are heard, respected, and addressed.
Taking time to understand each other’s perspectives is so important for achieving a comprehensive and effective financial plan. Jointly reviewing and planning financially using the items on this checklist can be a transformative step toward a secure and peaceful second half of life and retirement. It’s an opportunity for couples to align on their priorities, mitigate risks, and work towards shared objectives, so that your transition towards retirement is not just financially sound, but also enriching for your relationship.
(Photo in this article provided by Ryan Malec)
About Ryan
Ryan Malec has worked alongside individuals and families, helping them make better decisions about their wealth for the past 15 years. Two of the most important things he has learned in the wealth management business are the value in giving well-thought-out investment advice and the benefit of that advice being delivered from an advisor that works independently.
He believes both offer perspective on the gravity of an advisor’s relationship to a client’s long-term financial wellbeing but also more fully expresses an advisor’s commitment to doing what’s right for the client. Ryan brings both technical expertise and personal experience in understanding the wealth management business and how to best deliver meaningful solutions to clients.
Before starting Unified Investment Management with his partner Travis Weitz, Ryan worked for Mercer Advisors for a little over a year via an acquisition of ACG Wealth where he had worked for 5 years. Prior to ACG wealth, Ryan worked as an advisor for 8 years at Fidelity Investments. He graduated from The Citadel with a Bachelor of Business Administration and later received a Master’s degree in Personal Financial Planning from Georgia State’s Robinson College of Business. Ryan currently resides in Roswell with his wife and three children.
About Unified Investment Management
Unified Investment Management’s boutique wealth management firm is focused on providing highly personalized service and tailored investment solutions. To ensure we can dedicate the appropriate time and resources to each client relationship, we work exclusively with individuals and families who have $1,000,000 or more in investable assets. This allows us to uphold our commitment to delivering a premium level of service and customized wealth management strategies. For more information visit our website.
Consult with your healthcare provider and other appropriate professionals before
engaging in any of the activities or following any advice in this article. Empty Nest Network is not
recommending the use of any promotions, products, or services that may be referenced in this interview and
you do so at your own risk. The views and opinions expressed in this interview and any related conversations on this website reflect the
views and opinions of the interviewee only and not that of Empty Nest Network.
To our readers: If you would like to share with us how you’ve successfully handled one of the money matters covered in Ryan’s checklist, or lessons learned on this topic from your own experiences, feel free to leave a comment in our section below this article.
