Rethinking financial goals after COVID-19 for empty nesters
Monday, 22 June 2020
You've worked hard, raised your kids and are now the proud owner of an empty nest. But what you probably imagined would be a few quiet years of rewarding yourself for a job well done has been disrupted by a global pandemic.
That might have you revisiting your current financial goals in light of the current uncertainty to make sure you're prepared for the years ahead.
While every empty-nest family is different, now is an ideal time to review your financial situation and make some adjustments to help protect your future. Here are some tips and suggestions.
Take a look at your retirement savings
There's no doubt the economic downturn has impacted most people's retirement savings. Chances are you still have enough time to allow your retirement accounts to rebound and get back on track toward a financially healthy retirement.
This is actually an excellent time to review your retirement savings—ideally with your financial consultant—and make any necessary adjustments. In addition to reviewing and possibly reallocating, maximizing contributions to your retirement savings accounts could give you additional peace of mind going forward.
Prioritize saving over non-essential expenses
This should have been a time to reward yourself. But, among other things, the pandemic has underscored the importance of having an emergency savings fund. With that in mind, you might wish to delay travel plans or other non-essential expenses temporarily in order to boost your savings.
You most likely have already spent less due to reduced activity during the pandemic—less eating out, driving, and travel. Sticking to this more frugal lifestyle—shopping for groceries less often and extending the time between salon visits, for instance—can help you keep expenses down and build your savings up.
Take advantage of low rates to refinance debt
Rates are at historic lows, which makes now a good time to refinance any debt you may have. Lowering the rate on your debt by refinancing can mean you'll pay less interest and possibly get out of debt sooner, which is essential as you look towards retirement.
If you have credit card debt, you could call your credit card company and ask them to lower your rate. You could also transfer balances to a lower rate credit card or one with a special introductory rate. You could also consolidate your credit card debt with a low-rate personal loan.
Whether you refinance your mortgage depends on how long you've been in your home and how long you have remaining on your mortgage. You might consider refinancing and reducing the term to 15 years, which could increase your payment but save you money in the long run.
Home equity lines of credit typically have adjustable rates, so if you have a HELOC, you'll probably benefit from current low rates without having to refinance. However, home equity loans typically have fixed rates. Whether it makes sense to refinance a home equity loan depends on the size of the loan and how long you have before the loan is paid off. If your outstanding loan balance is large, it might be worth refinancing.
Look into unemployment
If you're one of the millions of Americans who has lost their job during the pandemic, you could qualify for unemployment benefits. The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, increased available unemployment benefits and extended them to many Americans who previously would not have qualified. Check with your state unemployment office to see if you are eligible for unemployment benefits until you find work.
Review your will and other important documents
It's always a good idea to periodically review your will, advance healthcare directives, estate plan and other important financial documents. Relationships, assets and tax laws all change over time, and as you grow older, making sure these documents are current and accurate becomes even more important. While you're updating, take the time to organize all your financial and other documents and make sure extra copies are given to the appropriate people.
The COVID-19 outbreak has impacted lives and finances in ways many people never imagined. It could, however, present an excellent opportunity to reevaluate your current situation and priorities and make important changes as you prepare to move forward.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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