[dropcap]W[/dropcap]hen your children leave home and you become an “empty nester,” you’ll probably make several adjustments in your lifestyle. But how will your empty nest status affect your financial situation?Everyone’s story is different, involving a range of variables. But here are a few issues to consider:Insurance – If your kids are through school, your mortgage is nearly paid off and your spouse has accumulated a reasonable amount of money in an employer-sponsored retirement plan, you may not need life insurance to replace income or pay off debts. However, you might start thinking about other goals, such as ensuring your savings will last your lifetime or leaving a legacy to your loved ones or a charity. Life insurance may be able to help in these areas.
Downsizing – Deciding whether to downsize your living space isn’t just a financial decision – it’s also a highly personal one. Still, downsizing can offer you some potential economic benefits. For one thing, if you still are paying off your mortgage, a move to a smaller place could free up some of your monthly cash flow, which, again, you could use to boost your retirement accounts. Furthermore, if your home has greatly appreciated in value, you might make a sizable profit by selling. (If you are single, you may be able to exclude $250,000 of the gain on the sale of your home; married couples may have a $500,000 exemption. Some restrictions exist on this exemption, though, so you’ll need to consult with your tax advisor before selling.)
