2 Common Expenses Empty Nesters Should Stop Paying To Boost Retirement Savings
Written by
Cindy Lamothe
Edited by
Kristen Mae
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Having your children move out is an emotional time with many decisions to make — it’s also the perfect time to start taking retirement more seriously. If you’re recently an empty nester, experts recommend you quit investing in certain things to prioritize your future.
“At this stage of life, retirement savings should be the top priority since college is temporary but retirement can last decades,” said David L. Blain, CFA and chief executive officer at BlueSky Wealth Advisors.
Below are the top things experts suggest you do once your kids leave the nest.
1. Excessive Life Insurance Premiums
“As an insurance expert, I advise redirecting funds from overpaying life insurance premiums and children’s college expenses into tax-advantaged retirement accounts,” said Ben Klesinger, co-founder and CEO of Reliant Insurance Group and Helping Hand Financial.
According to Klesinger, permanent life insurance beyond when children are dependent is unnecessary and those premiums would serve empty nesters better in an IRA. He said the stock market’s 7% annual return after inflation provides income security if invested properly.
“Having saved clients six figures by optimizing their life insurance, I know how this strategy boosts retirement savings,” Klesinger said. “401(k)s, IRAs and Roth IRAs should be top funding priorities once children are independent.”
Marty Burbank, estate planning attorney and owner of OCElderLaw, recommended the same. He agreed that too often, people continue overspending on their adult children or life insurance premiums out of habit. Instead, he suggested maximizing contributions to tax-advantaged accounts like 401(k)s and IRAs.
“I often advise clients approaching retirement to reassess how they’re allocating funds,” Burbank said. “While college is temporary, retirement can last 30 years. Prioritizing your financial security is key. Clients are often surprised to find they’re overpaying for life insurance or college when those needs have changed.”
Burbank feels permanent life insurance beyond when kids are dependent is unnecessary.
“Those premiums would serve you far better invested for retirement,” Burbank said. “I’ve helped clients redirect six figures into retirement accounts by optimizing life insurance.”
While many empty nesters may still need some life insurance coverage — especially to protect a surviving spouse or cover final expenses — it’s worth reviewing your policy to ensure you’re not paying for more coverage than necessary.
2. Ongoing Support for Adult Children’s Expenses
It’s all too common for parents to continue subsidizing their adult children’s expenses, from rent and car payments to streaming services and phone bills, out of habit rather than necessity. While it’s natural to want to help your children, financial experts emphasize that every dollar you give them is a dollar you’re not investing in your own retirement security.
“Your adult children’s financial future is now their responsibility. Yours is ensuring you have income for an extended retirement,” Burbank emphasized.
Instead of continuing this financial support indefinitely, consider setting clear boundaries and timelines for these payments. This will also encourage your adult children to develop financial independence while you focus on securing your retirement.
How To Redirect These Funds to Retirement
In 2025, individuals aged 50 and older can make catch-up contributions of an extra $7,500 to 401(k)s and $1,000 to IRAs. This means you can contribute up to $31,000 to your 401(k) and $8,000 to your IRA annually.
Even better: starting in 2025, workers ages 60 to 63 can make “super” catch-up contributions of $11,250 to their 401(k), bringing their total possible contribution to $34,750 annually.
Consider Downsizing Your Home
According to Klesinger, downsizing homes also generates substantial retirement funds.
“Selling a larger house and investing proceeds generates higher returns than home equity alone,” Klesinger said. “My firm guides high-net-worth families to investments producing retirement income for potentially decades.”
Blain agrees. He said downsizing to a smaller residence and investing the proceeds can generate income during retirement.
“Empty-nesters have likely built up equity in their homes over the years,” Blain said. “The stock market has returned 7% annually after inflation, so home sale proceeds properly invested could provide income for retirement.”
Monetize Your Home
“When you’re an empty nester, one of your most important financial assets is your nest,” said Martin Orefice, CEO of Rent To Own Labs.
Your home provides considerable value when you sell it, letting you monetize it while still living in it, especially if you suddenly have extra space in bedrooms, garages or basements.
According to Orefice, preserving your home’s value is essential. Investing in regular maintenance and repairs is a good starting point, but you should also consider renovations, additions or landscaping features to keep your home current and desirable for when you decide to sell.
“Monetizing your home can be as low-effort as renting out some storage space or as involved as renting out parts of it on Airbnb or even taking on a full-time tenant.”
This can be a lot of work, Orefice added, and you’ll give up some privacy in the bargain, but you can get some serious income from an arrangement like this.
“Allowing you to pay off any lingering debt, keep up with property taxes and utility bills, or build your retirement savings.”
Work With a Qualified Financial Advisor
Every empty-nester’s situation is unique, so working with a qualified financial advisor to develop a customized retirement income plan is key.
“But as a general rule, reducing or eliminating expenses tied to earlier life stages and redirecting those funds to retirement savings is a sound strategy,” Blain said. “With retirement possibly lasting 25 years or more, saving enough to generate income over the long term should be the top financial goal during the empty nesting years.”
The Bottom Line
Once your children have flown the nest, it’s time to shift your financial focus from supporting their needs to securing your own future. Reassessing life insurance coverage, setting boundaries on financial support for adult children, and potentially downsizing your home allows you to redirect significant funds into retirement accounts, giving yourself the financial freedom to enjoy the retirement you’ve worked decades to achieve.
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