Brenda Vingiello, Sand Hill’s Chief Investment Officer, joined Squawk Box to discuss her thoughts on the latest market trends and market outlook for 2025. This
Empty Nesters Need to Protect Their Nest Eggs
Published Date : August 23, 2016
School will be starting up again soon. Perhaps some of you are sending your kindergartner off to school for the very first time with a shiny new backpack and lunch box in hand. Or perhaps some of you are sending your youngest child off for their last year of college, the last to leave the family nest. A new chapter of life has just begun for you. This may feel like a strange and uncomfortable period of loss and change, but it is also a period of gain and financial awareness. You’ve been diligently squirreling away money for college tuition so now what do you do? It’s likely time to revisit your long term planning as a result of this new phase of life.
With the costs of college tuition soon behind you, you may finally be able to focus more fully and save more consciously for your retirement. This new phase of life allows some fiscal freedom to recalibrate and push these funds into your retirement savings. This can be done in the form of increased retirement fund contributions or active saving in your trust and investment accounts. After all, it’s likely that for the last 18 years or more you’ve concentrated on funding your children’s education. Now your retirement can move to the front burner. In fact, using this new empty nest phase to fill the gap in your retirement savings is key. There’s no time like the present to consciously review, update and test your long term plan in this post-child-rearing catch up period to retirement.
Directing money that previously has gone into college funds is not the only way to catch up to your retirement plan. Spending can be cut during this phase of life. You are now no longer feeding an army and your energy and utility costs are also likely to be less. Perhaps there are premium cable TV channels that your child watched, or memberships and subscriptions that can be cancelled. A review of your discretionary spending will also allow you to identify ways to dramatically reduce your spend rate and increase your savings rate.
Your insurance coverage is likely due for a review. Many people have enough life insurance coverage to ensure that the cost to educate their children is covered. With your last child soon to graduate, this may not be a necessity and perhaps you can adjust your life insurance to a lower death benefit or fully paid policy.
Similarly, it’d be a good time to review your other policies to include home, auto and umbrella policies. An umbrella policy for parents of college students is an important wealth preservation tool, given the higher than normal liability risk. That risk doesn’t leave you while your son or daughter is away at school.
Of course, while you plan for the next stage of your life, the door never really closes. Your children and aging parents may come knocking. It’s very important to consider a contingency plan should family members need your help. As written in our Sandwich Generation blog, the financial burden of caring for both parents and children can be significant.
You’ll be busy in your empty nest years. Part of empty nesting means tapping your ambitions, hobbies and reveling in “you” time, whether that’s scaling back on your career or focusing on a new one, traveling to exciting destinations or trying new adventures. Setting aside funds is an important part of accomplishing the things you want to do.
Getting your financial picture into focus with appropriate and realistic plans should ensure that you continue on track to achieve your retirement goals. We recommend you be in touch with these plans regularly.
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Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
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