The
next sound you hear will be that of Rosemary Jordan crying her
eyes out. Ask for her recollections of the day her daughter left
home for good, and her voice suddenly goes dead. "Uh-oh,"
warns Greg, her husband. Through her sobs, Rosie then reconstructs
the day last August when the younger of her two children, Jennifer,
22, a newly minted college grad, packed up her room and moved
to Bloomington, Ind., 50 miles away from her parents' home in
Indianapolis. "If you've done your job right as a parent,
it's a good thing," Rosie sniffs. But knowing that the time
was right for Jennifer to declare her independence doesn't make
Rosie miss her any less. After three months, Rosie admits, "we
still feel the void."
There is one part of the child-rearing experience
that the Jordans don't miss, though: the endless expenses that
came with raising Jennifer and her brother Michael, 26—the
piano lessons, the extracurricular activities and, of course,
the college costs. "I don't miss writing all those tuition
checks,"
declares Greg, 52, who estimates that he and Rosie, 54, spent
$150,000 over the past eight years to put both of their children
through Indiana University. Now here they are, home alone, suddenly
with money to burn.
In theory, anyway. "We're focused on saving
for the future," says Greg, a former county treasurer who
recently launched a business advising other counties on fiscal
matters. Within the next five years or so, Rosie, a career counselor,
hopes to retire from Eli Lilly, the pharmaceutical company where
she's worked for the past 22 years, to become a career consultant.
"I love what I do," Rosie says. "But there are
other things to think about." Like, for example, themselves.
Now that the kids are gone, says Greg, "our priorities are
changing."
How so? The Jordans want what most couples in
their position desire: to make a success of this next chapter
in their lives—in
their case, to build second careers that give them more flexibility
than their old ones; to make retirement a viable option within
the next several years; and to feel fulfilled along the way. As
with other empty-nesters, they have more disposable income to
help meet those goals than they did when their children were living
at home. The challenge is to put that money to its best use.
Be Selfish for a Change
Now that the children aren't your most pressing
financial concern, what is? "You have got to start thinking
in terms of looking out for yourself," advises David Twibell,
president of wealth management at Colorado Capital Bank in Denver.
The first order of business: Set up an aggressive schedule for
paying off any nonmortgage debt you have—credit-card balances,
home-equity lines of credit, loans you took out to help put the
kids through college. After all, retirement is looming closer,
and you don't want to still owe money once the paychecks stop.
Then sit down with your spouse and think through your other key
goals, for the immediate future as well as the next several years:
Do you hope to make an early exit from the work force or maybe
launch a second career? Can you finally afford to renovate the
kitchen? What about taking that trip to Europe you've always dreamed
about? "When you become an empty nester, you are at a new
chapter in your life," says Alan Haft, a financial planner
in Boca Raton, Fla. It's important to consciously plan for it,
not just kinda, sorta let it happen.
Get Serious About Saving for Retirement
Sure, it's tempting to reward all your diaper
changing and soccer shouting with a 105-inch plasma TV. You've
earned it. But rather than put your newfound extra disposable
income into lifestyle improvements, you'll be better off using
the bulk of it to kick your retirement savings into high gear.
Studies show that people between the ages of 45 and 54 have saved,
on average, less than $50,000. Yet it takes a cool $1 million
or so to generate $40,000 to $50,000 a year in retirement income
without having to worry about depleting your assets. Although
the Jordans have almost no debt (they paid off their mortgage
this summer) and have saved steadily for retirement (even while
the kids were in college), they don't have enough set aside yet
to maintain their lifestyle once they stop working. So they're
now determined to max out every retirement account available to
them, including taking advantage of catch-up provisions that allow
folks over 50 to make extra contributions. This year you can put
an additional $5,000 into a 401(k), for a total of $20,000, and
an extra $1,000 into an IRA, for a total of $5,000.
