When your kids finally fly the coop, it’s tempting to go on the spending spree you might have enjoyed while single and childless. But being an empty nester is also a good opportunity to rein in your spending and boost your retirement savings.
You’re likely to have mixed emotions when the kids move out, feeling sad that they are gone but also thinking about what to do with all your extra money. You may want to dip into your savings or whip out the credit card to give the house a makeover or go on a luxurious vacation.
If that’s what you’re thinking — think again. Most financial experts advise against it. In fact, they suggest going in the other direction by cutting certain expenses altogether and putting the savings into your retirement fund. Here are six things empty nesters should stop buying or spending money on to boost their savings.
1. A House That’s Too Big
If it’s just you and your spouse (or just you), do you really need five bedrooms, three bathrooms, and a family room the size of a tennis court? Selling your home and moving into a smaller, less expensive place has numerous benefits: You might end up with a nice profit you can put towards a hefty down payment on a new home, and you’ll probably have lower mortgage payments, utility bills and property taxes.
One thing you don’t want to do is sell your big home and then buy another one that is also too big — and expensive.
2. Multiple Car Expenses
When you had high school or college-age kids at home, you might have kept multiple cars at the house and expenses to go with them. You no longer need that many cars, so it’s a good time to stop paying for car insurance policies that include several drivers.
“Remove adult kids from your policy to lower premiums if they have their own insurance,” Andrew Lokenauth, a finance expert and founder of Be Fluent In Finance, told the BestLife website.
3. Purchases That Increase Your Debt
There are better times in life to buy a lot of stuff that will run up your credit card balances or require personal loans. On the contrary, it’s a good time to pay those balances down.
Fidelity suggests starting by paying down high-interest debt such as credit cards. After that, focus on student loans — yours and your kids, if applicable. While aggressively paying down those debts, pay only the minimum on lower-interest debt.
4. Bulk Groceries
When you had a full house, buying bulk groceries at the local supermarket or warehouse clubs such as Costco and Sam’s Club probably made financial sense. But with fewer mouths to feed, you can save money by giving up your warehouse club membership and cutting back on grocery purchases. This is another good way to put savings toward your retirement.
5. A House Full of Holiday Gifts
Let’s face it: There are few joys in life greater than watching your kids tear through presents during birthdays or the holidays. Few things can drain your bank balance quickly. Now is the time to stop buying so many gifts and put your money toward a retirement fund.
6. Impulse Purchases
BestLife noted that a common financial mistake empty nesters make is spending money too freely. Rather than do that, make a financial plan to manage your spending and build your nest egg.
“While it’s tempting to indulge a little more now that you have extra funds, be wary of lifestyle inflation,” Tim Schmidt, a personal finance expert and founder of IRAInvesting, told BestLife. “It’s common for empty nesters to start spending more just because they can. Remember, this is a golden opportunity to boost your retirement savings.”