Parents left with an empty nest often experience mixed emotions. Whether reluctantly or willingly, they must also start a new chapter in their lives, which will inevitably involve making financial decisions.
At least it might be a quieter, tidier home in which to make those decisions!
Dianne Charman, a senior financial adviser at Jade Financial, has some useful advice for women in this situation: “It is time to think about you.”
It’s not all about the kids any more.
It is also time to ask yourself some serious questions. When would you like to retire? What sort of retirement do you envisage? Do you want an overseas trip every year? Do you want to do something different workwise until you retire?
One of the first things to consider is whether you might need any upskilling in a given career. This might be the case if you want to change jobs or careers, get back into the workforce or perhaps just because you have been too time poor over the past few years to keep your skills up to date.
It is also time to get a grip on your household budget and make some financial goals.
Here are six useful tips
- Set some financial goals, such as paying off your mortgage if you have one, with measurable time frames.
- Calculate your annual budget to work out how much money you will need in retirement. If this includes an offshore holiday and one or two local holidays every year, estimate how much that will cost (and be realistic!). Doing this will pretty quickly tell you how much you need to save over the next few years.
- If you aren’t forking out as much money on food, sporting activities and school formals, don’t spend the extra money, add it to your savings, or use it to reduce debt. Otherwise, as Suzanne Hadden of BFG Financial Services points out, you are not improving your financial situation.
- Start to build your superannuation balance. It can be a highly tax-effective form of saving. Individuals over the age of 49 can inject up to $35,000 of pre-tax earnings a year into super. This means that in addition to the super guarantee, which is equivalent to 9.5 per cent of your salary, you can sacrifice more of your salary into super. Individuals can also put up to $180,000 of after-tax money into super each year. (In the 2016 budget the government announced that it would limit superannuation tax concessions from July 1, 2017. However, this hasn’t been legislated yet.) “Between the ages of 50 and 65, you need to be belting as much as you can into your retirement nest egg,” says Charman.
- If your kids become “boomerangs” and decide to move back in, charge them board if they are working. Financial responsibility, after all, is best learnt from an early age.
Factor into your plans the possibility of gaining obligations, such as looking after ageing parents.
When adult children move back home
Sue Morris (pictured), 63, is a glass-half-full type of person, so when her empty nest unexpectedly became full again two years ago, she was unfazed.
Interestingly, it had an equally muted effect upon the financial plans she had made with husband Alan, even as he neared retirement.
The couple had enjoyed five years with both children off their hands when the younger, then 31, returned home because of ill health.
“We just went along as we did,” says Morris. “We’re not flashy people; we’ve never had big jobs where we’ve had lots of money. We live carefully and we’ve got what we’ve got and make the most of it.”
Morris, who trained as a hairdresser, has worked as a lollipop lady at the local primary school for 27 years while her husband, a local football club stalwart, is a dispatch clerk.
“You got married, had children, didn't have career jobs and then you had to quit work when you had children,” says Morris – which she thinks was a system not without merit.
“It makes you reassess your life and work out what you want – whether to be a full-time mum or a career woman. You can’t be both. Something has to miss out somewhere and often now it’s the kids that miss out.”
The couple have lived in their 1920s bungalow for the 39 years of their marriage and in the past couple of years have seen its value skyrocket because of its location in one of Melbourne's coveted school zones.
There are vague plans to sell and move further down the train line but it’s the chance to travel for the first time to Europe when Alan retires next year that is of more concern. And that's where having an adult child back under the roof pays off.
“When we go away at least she's here to look after the garden,” says Morris. “She’s not working but she’s on a disability pension and has her own money. I’d rather have her here where she can be looked after.”
Case study: Natasha Hughes