When children leave home, you may have extra resources to invest in yourself.

“Pomp and Circumstance” plays. You beam with pride as your child moves the tassel from one side of the mortarboard to the other. Congratulations. Your kiddo just graduated college. 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 fulfill your own. While you may be tempted to splurge on a pricey vacation, consider these other uses first.

Be realistic
You’ll never stop caring for your kids, both emotionally and financially. Many parents want to continue offering their children extra support, whether it’s a down payment on a house or college funds for future grandchildren. If you’d still like to help out financially, talk with your financial advisor 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 iteration likely named guardians for your minor 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 to tuition could be reallocated to a cause that’s near and dear 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 brokerage accounts, 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 life 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.

Your child can stay on your healthcare policy until the age of 26. But if your child is eligible for his or her own employer-sponsored coverage and leaves your plan as a result, you could save money. The same holds true for auto insurance. Removing your child from your policy could lower the cost as much as 50%, according to the Insurance Information Institute.

Remember: Medical providers may be prohibited from sharing information with you about your now-adult child’s health. Talk with your kid about whether they’d like to authorize you to have access in an emergency situation.

This is also a good time to think about long-term care insurance. Studies show that long-term care, which generally is not covered by Medicare, could deplete your retirement savings. Buying a policy when you’re younger and in good health will be easier than trying to purchase one as you get older.

Treat yourself
Boston College’s Center for Retirement Research found that spending on nondurable goods, the fun things, jumped more than 50% per person for empty nesters. That’s understandable after years of paying for dance lessons and soccer dues. So if your budget allows, make plans to travel, return to school, start a business or do whatever you’ve dreamed of. Ask your advisor to help you set aside a certain percentage for the fun stuff.

Move on
Consider where you’d like to live. Are you perfectly happy in your current home? Would you prefer a smaller house or a beachfront condo? 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 bolster your retirement savings, you could also benefit from a lower cost of living, maintenance costs, property taxes and insurance premiums.

Focus on you
Now that you have more time and resources, you can prioritize your future. Talk about this life change with your professional advisors 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

  • Consider making a catch-up contribution to your retirement savings
  • Update your will and other beneficiary accounts
  • Review your insurance policies
  • Discuss long-term care coverage

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. Surrender charges may apply for early withdrawals and, if made prior to age 59 ½, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. Please consult with a licensed financial professional when considering your insurance options.