Rebuild your nest egg with these money moves

Retirement plans
Rebuild your nest egg with these money moves

By Sharon Epperson, Katie Young | Special to CNBC.com
Published: October 13, 2016 8:30 AM ET


Have an empty nest and an equally empty nest egg?

“Education expenses often dominate everything, and once that goes away, the key is knowing what the gap is and knowing the plan for what to do with that money,” said Levi Brandriss, an advisor with Ameriprise Financial in Bethesda, Maryland.

Refocusing on their own savings is something boomers appear to have trouble doing.

Researchers at the Boston College Center for Retirement Research estimated that couples who have two children and make $100,000 a year should be able to save an extra 12 percent for retirement once they are empty nesters.

In reality, that same study found that families said they were only able to bump up their savings by less than 1 percent.

Sound familiar? Then here’s what you need to do to get your nest egg back on track.

Declare a financial blackout

Mark La Spisa, president of Vermillion Financial Advisors in South Barrington, Ill., suggests instituting a blackout period for making financial decisions.

“The temptation is too big to start celebrating and to start spending money, buying that brand new car you have sought for years, going on that month-long European vacation or doing a home addition,” he said.

For six to 12 months don’t make any changes or big-ticket purchases, which should give you time to think about your goals for this next big phase of life, he said.

Stockpile cash

Focus on building up a cash reserve, especially if it was depleted while you paid those college tuition or other bills.

Brandriss recommends his clients save enough to cover monthly expenses for up to two years.

“The key reason for having a few years of cash on hand is that you can handle an above-average market downturn,” he said. That cushion will allow you to retire when you want, Brandriss said.

Don’t downsize the house, trim insurance instead

Once the kids are gone, it’s a natural reaction to want to exchange your house for a smaller one.

Brandriss advises against acting on that impulse.

“The costs of buying and selling a home, only to do it again during retirement, may cost you more money,” he said.

Instead, review your insurance coverage and look for places to save. If you had children on your auto insurance, remove them. If you had an umbrella policy or are paying a big premium for a multimillion-dollar life insurance plan, you may not need it if your kids are gone and your house is mostly paid off.

Once you shore up your finances, it’s time to start planning for the freedom and fun that come with that empty nest.

Note: The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendation for any individual. Please remember that past performance of investments may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this post serves as the receipt of, or as a substitute for, personalized investment advice from Vermillion Financial Advisors, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed within this newsletter to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

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