Savings Strategies for Empty Nesters

November 22, 2024

Share this article

Once your children leave home or “fly the nest”, the house may not be the only thing that suddenly seems less crowded. You may find more room in your monthly budget, too. That means it’s a good time to revisit your numbers and think about reallocating any extra money to your savings accounts.

Even if you’ve been mindful about putting money away during your child-rearing years, you may still find yourself playing catch-up when it comes to certain savings goals.

Here are five savings tips for empty nesters who are getting ready to say goodbye to their kids but aren’t quite ready to say hello to retirement just yet.

1. Max out retirement contributions

If saving for retirement has taken a backseat while you were raising kids, it may be time to ramp up those contributions to your 401(k)s and IRAs.

The good news is that individuals age 50 or older can enjoy the perk of making so-called “catch-up contributions” to certain retirement accounts. In other words, you get to contribute more than the standard annual limit.

For 401(k) plans

For 2025, the IRS allows you to contribute up to $23,500 ($23,000 for 2024) to your 401(k) plan, but if you're age 50 or older, you could make an additional catch-up contribution of up to $7,500 (same amount for 2024).

Important: Under SECURE Act 2.0, starting in 2025, 401(k) plan participants age 60 to 63 will have a higher catch-up contribution limit. This higher catch-up contribution limit for 2025 is $11,250 (instead of $7,500). See the IRS press release here for more information.

For IRAs

The annual contribution limit is $7,000 for both 2024 and 2025, but individuals age 50 or older could make an additional catch-up contribution of $1,000.

Catch-up contributions provide an opportunity to help bridge any gaps in your retirement savings, so take advantage if you can. Consider turning up those automatic deposits and going into super saver mode.

Good to know: IRS contribution limits and rules are always subject to change. Visit the IRS website or consult a tax professional for the most up-to-date information.

2. Give your health care savings a boost

For retirees, healthcare expenses can become particularly burdensome, especially when we start talking about long-term care.

Boosting your healthcare savings is an important goal during your empty-nest years. If you have a high deductible health plan through your employer, you might consider opening a Health Savings Account (HSA) and contributing to it while you’re still working.

HSA funds are dedicated toward paying for certain qualified healthcare expenses like prescriptions and medical copays. And they could offer potential tax savings as well.

3. Think small

Before putting down some serious cash to renovate your home after the kids move out, talk to your spouse or partner to see if you still need all that space. Perhaps a five-bedroom house may not make sense anymore.

Downsizing – moving to a smaller, less expensive home – can have its benefits. It could reduce your mortgage debt (if you don’t already own your house). And if you do own your house, selling it and moving into a smaller place could mean extra cash. A smaller place usually comes with lower utility bills and maintenance costs.

The money you save or earn from downsizing can be allocated to your retirement or healthcare savings goals. You can even use the money to pay down other debts.

4. Re-evaluate life insurance needs

After your kids leave home, it’s also a good time to review the life insurance policy you purchased when you were just starting your family. As your children become more financially independent, you may not need as much life insurance as before. What you may save on premiums can be put toward other savings priorities.

5. Be mindful of your spending

Being able to reclaim a portion of your budget from your kids may invite overspending. Because lifestyle inflation can hit empty nesters, too, it’s important to revisit your savings goals and budget.

Also, something to consider as you’re reviewing your spending and savings: Do you plan to continue providing financial support to your children once they leave home? If so, how much?

It’s important to set clear expectations because as parents, it may be hard to resist the call for help. But you don’t want to fall behind on your own savings goals while you’re helping out your adult children. Remember, once your child-rearing years are over, it’s okay to put the spotlight back on yourself as you work to achieve financial security in retirement.

Bottom line

As empty nesters, you and your spouse can finally put the focus back on yourselves and begin a new chapter in life together. It’s an exciting time to travel and explore the world, rediscovering yourself in the process. While you’re living your best life, don’t neglect those savings goals you’ve worked so hard on. Keep going. These years offer some great opportunities to put away more money before retirement.

This article is for informational purposes only and shall not constitute an offer, solicitation, or recommendation. This article was prepared by and approved by Marcus by Goldman Sachs® but is not a description of any of the products or services offered by and does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA is not providing any financial, economic, legal, accounting, tax or other recommendation in this article and it is not a substitute for individualized professional advice. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, or any of its affiliates, none of which are a fiduciary with respect to any person or plan by reason of providing the material or content herein. Neither Goldman Sachs Bank USA, nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.