The Empty Nesters' Guide to Spending

by Jean Chatzky
Photograph: Illustration: Christian Northeast

Your will most likely named guardians for minor children and stipulated how your assets would pass to your heirs. Now that your kids are adults, consider making one of them the executor, particularly if your children will be inheriting the bulk of the assets. Also, if your will included a testamentary trust (in which case your assets will flow not to your heirs directly but into a trust), you may no longer feel it’s necessary, says Christine Metsch, an
estate-planning attorney in West­chester County, New York.

You should also designate powers of attorney for health care and finances so that someone else can make those decisions for you if you’re incapacitated. Generally, you’ll give those powers to your spouse, but you may want to make your adult children successors so they can step in if your spouse can’t or won’t do the job. Finally, you’ll want to review the beneficiaries named on your retirement accounts. By law, your spouse has to be your beneficiary unless he or she signs away those rights. If you included testamentary trusts in your plan, you probably made the trusts your successor beneficiaries. If you’re getting rid of those trusts, you’ll need to change your documents so your kids can inherit directly.

Increase your retirement contributions to at least 15 percent of your income

Chances are, over the years you shortchanged your retirement to pay for college, summer camp or other things your kids needed. Now it’s time to make up any slack in those retirement accounts. If you don’t know where you stand, go to and run the Ballpark Estimate. The process takes about 30 minutes, but at the end you’ll have a clear sense of how much extra you need to be putting away.

Don’t spend more than 5 percent of your portfolio every year to help your children

If you give your adult children money in the form of an annual gift (in 2010 you can give up to $13,000 tax free to each of any number of people), make it clear that every year you’ll have to carefully consider your financial situation before you do it again. If your kids balk, explain it to them this way: If you dig too far into your nest egg now to help them out, they’re going to have to return the favor later—just when they’re trying to pay for college for their own kids.

After you retire, plan to budget about 10 percent of your income for travel and fun

For most people, retirement is a 30-year period that comes in two stages. During the first stage, you’re healthy, vital, active; during the second, you slow down. Don’t wait until you’re too old or too sick to do the things
on your Bucket List. Travel. Learn a language. “Have experiences that you’ll be able to talk about when you’re no longer able to do these things,” Levin advises. Americans now spend roughly 8.7 percent of their yearly disposable income on recreation. That’s about $2,700 a person. It’s a fine amount to spend—in fact, if you can, spend more. Just be sure you’ve also got tomorrow covered.

—With reporting by Arielle McGowen

Jean Chatzky, More’s finance columnist, can relate: She has kids, a husband, a mortgage and an older parent. She knows how far you need your money to go. Click here for more of her advice.

Originally published in the June 2010 issue of More.

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