Financial Planning for Those in the Empty Nester Stage

Life brings about many stages and phases, each with its own set of perks and challenges. Empty nesters experience a wide range of emotions as their children gain their wings and fly, yet through it all they still shoulder some hefty financial burdens. A recent study, How America Pays for College 2018, performed by Sallie Mae and Ipsos showed that families often split college tuition and cost of living responsibilities. On average, parents typically contribute about 34 percent of the total cost of college. This financial responsibility often coincides with life changes and variations in insurance and employment, making it difficult to enjoy the empty nester phase in the way you originally hoped.

With proper limits, and a re-evaluation of spending priorities and budget, however, many empty nesters have found that they receive freedom alongside their children, and they enjoy this new phase of life with joy. As with anything in the financial realm, a bit of planning and forethought goes a long way.

Here are our top tips for soon-to-be empty nesters:

  1. College Funding Options: Review the pros and cons of various options, such as Self-pay, Financial Aid, 529 Plans, Florida Pre-Paid, UTMA/UGMA.
  2. Income Tax Issues: Be aware of potential “empty nest” tax triggers (ex.  child is no longer considered as a dependent) and “kiddy tax” triggers with joint savings accounts.
  3. Children and Money: If you have named your children as beneficiaries under your will or trust, review their age of attainment (ex. 18, 30) and decide whether or not that child is or will be capable of managing their own money.
  4. Medical Insurance: Consider your child’s options for medical and dental insurance.
  5. Legal Directives: Have your child sign a Power of Attorney, Health Care Designation and Living Will.  Once he or she reaches age 18, you, as the parent have no legal right to act/speak on their behalf without these documents.
  6. “ICE” In Case of Emergency List: Develop a list of phone numbers for primary care physicians, hospital, insurance company, lawyer, etc. so family members have a trusted source to contact.

Contact Andrew Hill Investment Advisors today to learn more about financial planning for all stages of life. We work with our clients to build strong portfolios that are actively managed to provide returns that match your goals.

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