The “empty nester” phase is such a fun stage of financial planning. (And near and dear to my heart because we have just moved into this stage!)

By now, the hope is that we have passed some financial savvy along to our children and launched them successfully into the “young adult” phase. We have hopefully gotten into a rhythm with our spending patterns, helping us to manage the month-to-month and find more places to build in margin more easily. We typically have a bit more freedom with our time and maybe even can begin envisioning what an “Act 2” (what is typically called “retirement”) might look like for us. Often, the financial focus in this phase can be ramping up retirement contributions to provide greater certainty in retirement outcomes. In addition, thought can be given to what kinds of buckets we will want in retirement: qualified, tax-deferred (traditional IRAs, 401k’s, etc.) vs. qualified tax-favored (Roth IRAs or Roth 401k’s) vs. non-qualified assets (brokerage account, real estate, etc.).

A good plan will often incorporate all of these, and this is the time to begin discussing how each will be used in the future to maximize after-tax income. In addition, it will be vital to make sure we understand other income sources that will be available, such as pensions and Social Security, and start thinking through how and when it might make sense to drawing each of them (and make sure we haven’t forgotten any =).

Transition to Act 2, or retirement, is in sight…this is the time to finish the planning journey well!