LexION Blog

How Should You Invest With an Empty Nest?

After your children have left the house for good and moved on into adulthood, you may find yourself with an influx of additional wealth (as well as free time). Although spending the additional free time is completely up to your discretion, there are some wise (and not-so-wise) ways to utilize that additional wealth.

Here are some financial points to consider after you encounter an “empty nest”:

Utilize the wealth for retirement

Often, when parents encounter additional room in their budget after their children leave, they’re tempted to spend that money on something fun or celebratory. After all, they’ve often already accounted for their budget and (hopefully) have already begun planning for retirement.

If you have the same idea in mind, consider using that money to make your retirement easier and smoother instead. Even if you’ve already began planning for retirement, additional wealth invested now can result in far less money that will need to be contributed later. Although a celebratory purchase may seem appealing now, you’ll essentially end up paying for it many times over by playing a costly game of retirement catch-up later.

Max out your 401(K)

If you want to utilize the extra room in your budget for retirement, maxing out your 401(k) is a great way to start. As of 2016, the contribution limit is $18,000 per year. And if you’re over age 50, you can take advantage of an extra $5,000 allowed for catch-up contributions.

This is an excellent way to invest with your newfound empty nest wealth, because it allows your wealth to grow tax-free towards retirement, and is only taxed once it’s withdrawn in your golden years (presumably at a lower income tax rate).

Want to learn more?

At LexION Capital, we never offer one-size-fits-all investment advice, and always help our clients adjust their financial plans to meet their needs during changing life circumstances (such as an empty nest). If you’d like to learn more, don’t hesitate to contact us today to speak with one of our fiduciary advisors.