When children leave home, you may have extra resources to invest in yourself.

“Pomp and Circumstance” is streaming throughout the auditorium. You beam with pride as a dean confers a degree upon your child, and you watch her move the tassel from one side of the mortarboard to the other. Congratulations. Your baby just graduated from college. With any luck, she already has a promising job in her chosen field, and she’s all set to start paying her own bills. Your financial obligations have suddenly diminished. Now what?

Well, you just got a raise, so to speak. The money once reserved for your child’s needs and wants is once again available to fulfill your own. While you may be tempted to splurge on a pricey vacation, consider these other uses first.

BE REALISTIC

You’ll never stop caring for your kids, both emotionally and financially.  Many parents want to continue offering their children extra support, whether it’s a down payment on a house or college funds for future grandchildren. If you’d still like to help out financially, talk with your financial advisor about the most efficient way to accomplish this without losing track of your financial goals.

PROTECT YOUR LEGACY

This is also a good time to update your will. Chances are the previous iteration named guardians for your minor children, which may not be necessary now that they’re young adults. If you’re inclined to charitable giving, the extra money that once went to college tuition could be reallocated to a cause that’s near and dear to your heart.

You may also want to make one of your children the executor of your estate. And if you haven’t already, you should designate your spouse or one of your grown children to have powers of attorney for your healthcare and finances in case of incapacitation.  Of course, whenever there’s a change in circumstances, you should review the beneficiaries on your retirement, savings and brokerage accounts, as well as your insurance policies.

THINK ABOUT INSURANCE

Speaking of insurance, you may be over-covered as an empty nester. Take the time to review your policies now that your children are no longer financially dependent on you. If you’re overpaying for life insurance premiums, you may want to cut back on coverage and pocket the savings. You’ll need some professional guidance here to make sure you maintain adequate coverage going forward.

Your child can stay on your healthcare policy until the age of 26.  But if your child is eligible for his or her own employer-sponsored coverage and leaves your plan as a result, you could save money. 

The same holds true for auto insurance. Removing your child from your policy could lower the cost as much as 50%, according to the Insurance Information Institute.

Regulations may prohibit medical providers from sharing information with you about the health of your now-adult child. Ask your child to carry a signed document that authorizes healthcare practitioners to discuss relevant information with you.

This is also the time to think about long-term care insurance, if you haven’t already discussed this with your planner or purchased a policy. Studies show that long-term care, which generally is not covered by Medicare, could deplete your retirement savings.

Buying a policy in your 50s and 60s when you’re in good health will be easier than trying to purchase one as you get older.

TREAT YOURSELF

When there’s newfound wiggle room in your finances, it’s tempting to want to splurge a little. Boston College’s Center for Retirement Research found that spending on nondurable goods, the fun things, jumped more than 50% per person for empty nesters. That’s understandable after years of paying for dance lessons and soccer dues. So if your budget allows, make plans to travel, return to school, start a business or do whatever you’ve dreamed of. Ask your advisor to help you set aside a certain percentage for the fun stuff.

MOVE ON

Next, consider where you’d like to live. Would you prefer a smaller house or a beachfront condo? Would you rather move to a less expensive home and invest the difference? If downsizing frees up some equity in your home, you could reallocate that money to other goals like starting a new career or funding retirement.

Moving to a smaller home might provide additional resources for your later years, which could make up for a less-than-stellar savings track record. In addition to using that home equity to bolster your retirement savings, you could also benefit from lower cost of living, maintenance costs, property taxes and insurance premiums.

FOCUS ON YOU

Now that you have more time and resources, you can prioritize your future. Talk about this life change with your professional advisors and make sure your financial plan reflects your new circumstances. For example, you may want to adjust your asset allocation to reflect your new goals or use the extra money to step up investments in your overall portfolio, potentially increasing your net worth.

NEXT STEPS

• Consider making a catch-up contribution to your retirement savings

• Update your will and other beneficiary accounts

• Review your insurance policies

• Discuss long-term care coverage

Material created by Raymond James for use by its advisors. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. © 2018 Raymond James Financial Services, Inc., member FINRA/SIPC. Securities offered through Raymond James Financial Services member FINRA/SIPC.  Investment advisory services offered through Raymond James Financial Services Advisors, Inc. 17-BDMKT-2798 BS 07/18

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Stephen P. Poitevint is located at 908 Tallahassee Highway, Bainbridge, Georgia, and can be contacted at (229) 246-7208 or www.poitevint.com.