Personal Finance

Financial tips for empty nesters

For Nick and Sheila, the kids have grown up and flown the coop. At age 51 and 53, respectively, it’s now time to look ahead at the next stage of life — retirement and ensuring their own financial house is in order. In Nick’s words, “we’ve done our job making sure our kids grew up with safety, opportunity, and love. Unfortunately, that meant some financial sacrifices of their own.” Luckily, Nick has a solid pension from his employer.

Bill and Marlee are also empty nesters who are ready to prepare themselves for retirement, but they do not have a pension to fall back on and will need to ensure they have assets to create income in retirement. According to Bill, who works for an oil parts distribution company: “We’ll be trying to save a lot of money now that the kids are gone, but I think I will probably have to continue working part-time, hopefully at something I love to do. That will give us a little extra to take some nice holidays.”

Gail, who works for a human resources company, is also an empty nester, but she has been a single mom for more than 15 years. She has always lived what she calls a modest life, adding: “I’ve lived without for so long now that I just do not need much to live on. Retirement for me is going to be more relaxed and incorporating some of the things I love to do like painting, gardening, and reading.”

As you can see, empty nesters come in all shapes and sizes. And while there is no universal formula for financial planning, some common characteristics of this group can be drawn from a study published by Manulife Financial:

Empty nesters are usually between the ages of 45 and 65. About 75 percent live with a partner, and more than 50 percent own their homes outright. They generally describe themselves as conservative investors, and most are likely to have balanced portfolios. Ninety-three percent have some RRSPs but very few have investments outside their RRSPs. Reducing taxes is a priority.

This period of life is typically a time of the highest discretionary income and the highest amount of relative savings. It is also the time to think seriously about retirement and get plans in place for the next 10 years.

The three biggest priorities for people in this age group are to plan for retirement, minimize taxes and get out of debt. Here are some of my tips for empty nesters getting set for retirement:

  • Get out of debt. A little over half of the empty nesters own their home free and clear. Most retirement experts will tell you that having a paid-off home in retirement should be a key financial goal. So talk to your banker or mortgage adviser about paying off your mortgage as quickly as possible.
  • Envision retirement. Planning for retirement starts with developing a vision of how you see your life after work. What do you see yourself doing? How are you going to spend your time? What will you do to keep busy? Studies have shown that successful retirees plan ahead and start with a vision.
  • Understand your expenses. Understanding your expenses before you retire is key to predicting your expenses in retirement. The most popular question in retirement planning is, How much do I need to have saved for retirement? You can only answer that question if you know how much you plan to spend in retirement. So you need to take a detailed look at your income and how you spend it, and then do some long-range calculations based on how you want to live.
  • Take stock of your portfolio. Most empty nesters have financial assets. On average, they have between $150,000 and $250,000 of investments to manage. With retirement getting closer, it is a great time to take stock and review your strategy. Before this stage in life, most investors have a growth mentality for their portfolio. As you head toward retirement, it is natural to feel more conservative. You have amassed some wealth, and it is important not to lose it.
  • Care planning. According to Wayne Taylor, president of the Canadian Association of Pre-Retirement Planners, empty nesters need to look closely at their relationships and be prepared for the possibility of caring for others. “We see a lot of empty nesters who planned for their own retirement but they did not foresee the financial resources that might be required if their parents or older siblings become dependent,” he says. Mr. Taylor adds that “empty nesters are at huge risk of becoming part of the sandwich generations. You hear more about adult kids [who] require more of their time and resources during divorce, for example.”
  • Enjoy your life. Raising kids is both rewarding and frustrating at the same time. You likely sacrificed a lot of your personal life to get your children to a state of independence. Once that day comes, it is important to take time to enjoy your life. Do things for you. Although planning for your future is important, enjoying today is just as important.

With droves of baby boomers heading into the empty-nest phase, more and more Canadians will be faced with changing financial issues. This phase of life is a great opportunity to pause, reflect and start planning for the next stage.


  1. Carrie

    Thank you so much for this atirlce, it saved me time!

  2. Beth Clifton

    This advice is too general. I would like to know why so little attention is given to the fact that the governments of the day are keeping interest rates so low that any “savers” that planned for their retirement are being penalized for saving. We are unable to invest in so called “equities” as the stock market is rigged in favour of the investment bankers. They charge fees on all the money invested with their firms. My idea of fairness is that the fees should only be charged on the profits made on the money brought to them by the client, not on the initial investment. Maybe then their would be a more level playing field.
    As retirees, we are watching the purchasing power of our savings disappear. So what was the point of saving for retirement??

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