It is the welcome culmination for any parent who has ever helped a son or daughter move into a dormitory- the day when all the tuition and fees are paid, and your child walks across the stage to get their college diploma. You’ve given them one of the most essential advantages any young person can have: a college degree—the key to better jobs, upward mobility, and enhanced quality of life. It’s a moment of great satisfaction; your education costs are paid in full.
With those costs completed, let’s reexamine your finances. Now that your children are out of college, it’s time to shift your focus to your own future. You likely have quite a few years left in the workforce, and you are probably somewhere near the peak of your earning potential, which means that it’s a perfect time to really get serious about building toward a secure, low-stress retirement lifestyle. Here are some tips to help you make the best use of the funds that you used to send to the college.
- Allocate more to savings. Now that you are no longer paying for books, fees, meal plans, dorm rent, or tuition, think about allocating a healthy portion away from those uses and toward savings. This is basic finance, since the most important habit associated with financial independence is the savings habit. This is the time in your life when the savings habit can really benefit you: with years before retirement and more disposable income available, you can put compounding and growth to work for you.
- Take advantage of tax-advantaged options. If your employer offers a 401(k) or a 403(b), try to deposit the maximum allowed, each year. If you’ve got an IRA, try to consistently max out your contributions. If you’re 50 years old or more, be sure to utilize your catch-up provisions to get even more into your retirement accounts (for 2025, persons 50+ can put an extra $7,500 annually in a 401(k) or 403(b), and those 60–63 can deposit an additional $11,250; for IRAs, the catch-up provision allows an extra $1,000 to be deposited).
- Sharpen your investment focus. Whether in your tax-advantaged accounts or regular taxable investment accounts, you need to be aiming for the kind of growth that will keep pace with—or, better outpace—inflation. Because you probably still have a number of years before retirement, the effect of inflation on your purchasing power should be factored in to every investment decision you make. Your financial advisor can work with you to understand your risk tolerance and help you construct a diversified portfolio that is matched to your goals and “investment personality.”
- Review your plan. It should come as no surprise that our financial priorities change as we go through different life phases. Now that your focus is shifting from education funding for your children to saving for retirement, it’s probably a good time to take another look at your financial strategy to look for revisions and refinements. This endeavor is where a fiduciary financial planner can really make a difference. By helping you look objectively at your resources, your spending, your saving and investing, and especially your most important priorities, your advisor can work with you to develop and refine your plan to align with your current situation and your goals. They may also be able to help you identify changes in your situation and the need for a revised approach to matters like life and health insurance, estate planning, and other important financial processes.
At Curio, we want to know about your financial priorities. Is it time to shift your focus to saving for retirement? Would a different spending plan better serve your most important priorities? We’d like to know what you’re thinking. Get in touch with us to get the conversation started!
