By Kristi De Rycke, Registered Assistant
May is a very exciting time of the year with many kids graduating from high school and college. As parents this can be a very emotional time as well. The phase “Time goes quickly” is no joke! Every parent deals differently with seeing their babies fly the nest. Letting go is very hard. Make sure to also celebrate all of your hard work that got them to the point they are in their lives. They truly could not have done it without you.
After all of the sacrifices that you have made for your kids, now is the time to refocus back on you. The average cost of raising a child per year from birth to 17 years of age was estimated by CBS news as $12,000 to $13,000 depending on if you live in a rural or urban area in the Midwest. (1) This would be more if you were helping to support them during college and they are a recent college graduate. This is now a lot of money that has been freed up for other uses. Did you and possibly a spouse put off other financial goals while raising your children? Did you figure that you would work on those goals when the kids were grown and gone? Well then now is the time! Ask yourself these questions:
Do you have an emergency fund of 3 to 6 percent of your living costs in case you have an unexpected leave from work?
How are your retirement accounts looking? Are they where you wanted them to be this close to your retirement?
Have you always wanted to open an IRA in addition to any company plans offered to give you more flexibility with when you can take them out? Did you know that you can withdraw Roth IRAs at 59 ½ as long as they have been invested in for 5 years without paying any further taxes on the money. They are invested in post-tax so the money will grow tax free and there are no required minimum distributions on the accounts like a company plan. The maximum contribution for 49 and younger is now $6000 per year and $7000 for anyone 50 and over.
Do you and possibly a spouse have hopes of an early retirement?
Do you have dreams for how you want your early years of retirement to look like? A new boat? Travel? Upgrades to your house?
Whatever you do want to focus on for you, do it before a lifestyle creep kicks in. This would mean that you would find yourselves spending a little more here and there everyday. You wouldn’t have much more accomplished or really have much enjoyment out of the extra money.
Not sure how to best save for your new goals? We encourage you to work with a financial advisor, who can assist you with reaching your financial goals.
By Greg Johnson
I see this all the time where parents are investing too much into their children and not enough into their own futures. I always say you can borrow money to send them to college, but you can’t borrow money to retire. Make sure you are keeping your focus on the prize at hand here. If you find yourself with less costs due to children moving on, make sure you allocate it quickly to your financial goals. Maybe it is paying off the mortgage quicker, reducing credit card debt, saving into a Roth IRA like Kristi talks about, or building up your savings account again. The key is to get started quickly and don’t let other things creep into your finances. We all love our children, but I am telling you it is ok to love yourself as well.