Move Someplace Cheaper
One
way to come up with extra cash for retirement and other goals:
Downsize to a smaller home now that you no longer need as much
space. Over a third of baby boomers do plan to move as soon as
they become empty-nesters, according to a survey by housing developer
Pulte Homes. The financial benefits can be substantial. Say you
sell your home, buy a smaller place and net $150,000 in the process.
Invest that money at age 55, and 10 years later you'll have nearly
$325,000, assuming an average return of 8% yearly. You'll also
probably save several thousand dollars annually in property taxes,
and, of course, the new digs will be cheaper to maintain.
Cut the Cord
You won't get to pocket that extra money, however,
if you just turn around and spend it on your kids. About a third
of adults ages 18 to 34 get financial help from their parents,
typically amounting to a few thousand dollars a year, according
to a University of Michigan study. Sure, it's hard to say no to
your child, even when that child is 25 years old and is five inches
taller than you are. But it's also necessary (occasional gifts
notwithstanding). By bailing out your adult kids, you delay their
learning how to manage money on their own (including the No. 1
lesson: If you can't afford it, you can't have it). And you rob
yourself of money you need for retirement and other goals.
The Jordans, for instance, made it clear to their
kids when they were still at home that Mom and Dad would not foot
the bills once they were out of college. To make sure Michael
and Jennifer had the budgeting skills they'd need as adults, Rosie
insisted they pay for such amenities as pizza and clothing out
of money they earned at summer jobs while they were in college.
And although the Jordans own the condo that their daughter now
lives in, Jennifer pays all of the expenses.
Have Some Fun
No doubt, financial planning for life after kids
takes work. But that doesn't mean empty-nesters have to lead monastic
lives. You're free, remember? Even the Jordans let themselves
feel it. This fall, when a group from church invited them along
on a Caribbean cruise in January, they quickly plunked down the
$3,000 that was required. "We'll miss the kids," says
Rosie. "But we won't feel guilty."
