Saving for retirement

Saving for retirement becomes a much larger priority for empty nesters, many of whom are just a few years from retiring. If you’re an empty nester who has been spending much of your energy – and money – on helping out your children, it’s time to turn the focus on yourselves and make sure you’ll be ready for retirement.

One of the first questions to ask is how much money you’ll need to comfortably retire. Now is a good time to be thinking about how you want to live your retirement. Do you plan to travel? Will you stay in your home? Will you be working part-time or consulting?

Most experts say you’ll need about 70 percent of your pre-retirement annual income to maintain your standard of living. If you haven’t put away enough money to do that, the IRS allows people 50 and older to make annual “catch-up” payments to their retirement accounts, even if they exceed the amount you can otherwise deposit without incurring extra taxes.

You’ll also want to look at your financial picture for anything that might affect your retirement plans. If you’re repaying your children’s student loans, for example, be wary of repayment options that continue after retirement – especially graduated option repayment plans in which payments get larger with time. Those growing loan payments could hit just as you’re adjusting to a fixed income.

You may also be facing financial obligations of caring for your aging parents at the same time that you’re saving for your own retirement. This often happens when you’re still supporting your children, making you part of the growing “Sandwich Generation.” Anticipating such needs can be helpful as you’re adjusting your own retirement savings plan.

Now that the kids are out of the house, it may be time to consider scaling down before retirement. If you have a lot of equity built up in your home, you may be able to add significantly to your retirement nest egg by selling it and moving to a smaller, less expensive home.

It’s important to keep saving for retirement while you’re still earning income. Retirement will be here before you know it, and you want to be ready. A good financial planner can help you find the best ways to do that.