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Your Financial Life
By Alix Gorshow / Feb 1, 2016

5 Tips for Empty-Nesters to Increase Retirement Savings


When your children “leave the nest,” your household expenses typically decrease, granting you the opportunity to save more for retirement, right?

Not exactly.

A recent study from the Center for Retirement Research at Boston College found that households only seem to boost their retirement savings rate by 1% or less after the kids move out.

“The retirement saving crisis is real, as the evidence suggests that households do not increase their savings very much even when the kids leave home,” the researchers explained. “Instead, they hold total consumption relatively constant, thereby increasing per-capita consumption. This response would be fine if households had adequate savings. But most households in their 40s and 50s have saved very little for retirement.”

As a result—if savings rates don’t increase—the majority of households will be unable to maintain their standard of living while in retirement.

To help you start saving more, the United States Department of Labor offers these five strategies:

1. Maximize contributions.

Contribute the maximum allowed to your retirement accounts, including catch-up contributions if you’re age 50-plus. If you’re still working, take advantage of company matching (if available), and if you qualify, the Saver’s Credit, a special tax credit, can reduce the taxes you owe on your federal return.

2. Work longer.

Putting off retirement can give you more time to save, more time for your savings to grow, and more time to utilize your employer benefits (such as healthcare).

3. Cut down expenses.

While this should be easier once the kids leave the house, it’s a good idea to start preparing before then, to help make the transition easier.

Start by creating a new budget, discussing downsizing options, and setting up automatic transfers of the money that used to be spent on the kids to your retirement accounts. That way, you don’t get used to having the extra funds.

4. Delay Social Security.

Waiting to claim your benefits will increase the amount you receive each month. If you delay beyond the full retirement age, you can earn retirement credits, which can increase your benefits by a certain percentage (depending on your date of birth).

5. Save in the right accounts.

Educate yourself about investing and the different types of retirement savings vehicles to make sure your money is in the right place.

Our free online calculator can give you a quick look at your retirement readiness and, if you’re behind, give you an idea of how much more you may need to save to improve your forecast.

The Retirement Outlook Estimator is for illustration only and is not intended to provide investment advice. It does not portray actual investment results or guarantee future results. Hypothetical investment returns do not reflect actual results or guarantee future results; your results may vary based on market conditions.