When children leave home, you may have extra resources to invest in yourself.
You’re beaming with pride as your child moves the tassel from one side of the mortarboard to the other – Congratulations, your child just graduated from university! With any luck, they’ve already secured a job in their chosen field and are ready to start paying their own bills. Your financial obligations have suddenly diminished.
Now what?
Well, you just got a raise, so to speak. The money once reserved for your child’s needs and wants is once again available to fulfil your own. While you may be tempted to splurge on a pricey holiday, consider these other uses first.
Be realistic
You’ll never stop caring for your children, both emotionally and financially. Many parents want to continue offering their children extra support, whether it’s a deposit on a house or university funds for future grandchildren. If you’d still like to help out financially, talk with your wealth manager about the most efficient way to accomplish this without losing track of your own financial goals.
Protect your legacy
This is a good time to update your will. The previous version likely named guardians for your children, which may not be necessary now that they’re young adults. If you’re inclined to charitable giving, the extra money that once went towards education costs could be reallocated to a cause that’s close to your heart.
You may also want to make one of your children the executor of your estate. And if you haven’t already, you should consider designating your spouse or one of your grown children to have powers of attorney for your healthcare and finances in case of incapacitation. Of course, whenever there’s a change in circumstances, you should review the beneficiaries on your retirement, savings and trusts, as well as your insurance policies.
Think about insurance
Speaking of insurance, you may be over-covered as an empty nester. Take the time to review your policies now that your children are no longer financially dependent on you. If you’re overpaying for insurance premiums, you may want to cut back on coverage and pocket the savings. You’ll need some professional guidance here to make sure you maintain adequate coverage going forward.
Treat yourself
With more time on your hands, why not indulge in activities that bring you joy and fulfilment? Whether it’s travelling to new destinations, picking up a new hobby, or simply enjoying some well-deserved relaxation, now is the perfect time to focus on you.
Downsize
Consider where you’d like to live. Are you perfectly happy in your current home? Do you want something less expensive so you can invest the difference? If downsizing frees up some equity in your home, you could reallocate that money to other goals like starting a new career or funding retirement.
Moving to a smaller home might provide additional resources for your later years, which could make up for a less-than-stellar savings track record. In addition to using that home equity to boost your retirement savings, you could also benefit from a lower cost of living and maintenance costs.
Focus on you
Now that you have more time and resources, you can prioritise your future. Talk about this life change with your wealth manager and make sure your financial plan reflects your new circumstances. For example, you may want to adjust your asset allocation to reflect your new goals or use the extra money to step up investments in your overall portfolio, potentially increasing your net worth.
Next steps
Guarantees are based on the claims-paying ability of the issuing company. Long-term care insurance or asset-based, long-term care insurance products may not be suitable for all investors. Please consult with a licensed financial professional when considering your insurance options.
Black MondayOn 19 October 1987, the stock markets experienced a dramatic plunge that prompted many firms to shut down their trading desks and turn off their phones to minimize internal losses. Raymond James refused to do the same. Our desks stayed open to help meet clients’ needs, resulting in our first and only unprofitable quarter since the firm went public in 1983. |
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Who was Raymond James?The Raymond in our name is actually from Edward Raymond, owner of a 15-employee mutual fund sales group, Raymond and Associates, along Florida’s west coast. He sold his company to Bob James on 15 July 1964, on condition that the surviving firm be called Raymond, James & Associates. Three days after the sale, Ed Raymond was involved in a near-fatal automobile accident and never joined the firm. Nonetheless, even after Raymond had passed away, Bob James insisted that his name remain on the door – ahead of James’ own. That was a promise he made to Ed Raymond three days before the accident, and Bob James was a man who kept his promises. |
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Bear Market of 1974The severe bear market of 1974 threatened the existence of Raymond James, which was bleeding capital by the day. Tom James, his father and other leaders took extreme measures to keep the firm afloat, slashing costs, foregoing paychecks and even attempting to sell the firm for just enough capital to protect client assets and retain as many associates as possible. The story could have ended very differently if not for a sharp upturn and continued rebound in the stock markets late in the year. |
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Taking Raymond James PublicWhen consideration was being given to taking Raymond James public, Tom James penned a letter to shareholders (largely employees at the time). ” … the public offering should be considered as a statement of our independence. While this is a psychological rather than an economic rationale, it is nonetheless very important. We have asserted for some time that we are not interested in becoming a small part of a very large corporation. That assertion results mainly from the inclinations of management rather than the economic benefits associated with either alternative. The public stock offering affords us the opportunity to enjoy a little bit of the best of both worlds. While shareholders will be given liquidity at fair market value, we will still have the ability to control our own destiny.” After 40+ years of Tom’s leadership, upon becoming CEO, Paul Reilly was often questioned about whether the company might ultimately surrender its cherished independence and be acquired by some larger entity. His response: “Not while I’m around.” It’s a theme that continues today. |
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