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7 Smart Money Moves for Empty-Nesters

It's time to re-analyze your current living expenses to save and invest.

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Parents love their children — that's a given — but that won't stop you from breaking out the trumpet in glee when your offspring start footing the bill for themselves. Oh, happy day! Need ideas on what to do with your cash now that it's actually yours again, empty nester? Consider these seven smart money moves once your kids fly the coop.

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1. Re-evaluate Spending

With fewer people living in the house, you'll likely see a reduction in monthly expenses. Re-evaluate your budget and assess how much you were spending before, and then look for areas to cut back. If you have a minivan or SUV that was suited to your larger family, consider trading it in for a smaller vehicle. You could possibly save money on the monthly payment, as well as pay less for insurance and fuel.

Or maybe you have the Cadillac of cable TV packages, which accommodated everyone's viewing needs. Look into downgrading to a cheaper cable package. If you don't watch much TV, get rid of cable altogether, and sign up for an inexpensive streaming service. Additionally, since there are fewer mouths to feed, come up with a plan to spend less on groceries. The more you save, the more cash you'll have available to reach more important financial goals — like finally making some headway toward your retirement fund.

2. Grow Your Retirement Account

Many parents make big sacrifices to provide for their children, which can include establishing college funds and fully or partially supporting adult children as they complete their educations. As a result, maybe you haven't contributed as much as you would have liked toward retirement. With the kids out of the house, now's the time to play catch-up.

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Work with a financial adviser, review your finances, and develop a realistic plan that lets you contribute as much as possible toward growing a comfortable nest egg. You can contribute up to $5,500 a year to an individual retirement account ($6,500 if you're 50 or older), and up to $18,000 a year to a 401(k) (plus an additional $6,000 if you're 50 or older).

3. Increase Liquid Savings

Then again, maybe your retirement account is on track but you lack liquid savings for emergencies like a car or home repair. Instead of spending extra money on vacations, shopping, or redecorating your home, take the cash you're saving each month from cutting expenses and contribute to an emergency fund.

4. Pay Off Debt

As you inch closer to retirement, the less debt you have, the better. Come up with a plan to pay off debt, especially credit card debt. This is not only costly debt — it also drags down your credit score.

Gather all your credit card statements and write down the amounts you owe and the interest rates you're currently paying. Some people tackle the debt with the highest interest rate first, since this is the costliest, whereas others attack the debt with the lowest balance first for a psychological boost. Whatever method you choose, pay more than your minimum every month, stop charging, and negotiate your interest rates.

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Additionally, consider making extra principal mortgage payments to pay off your home loan balance sooner. If you're able to pay off your mortgage before retiring, you can lower your expenses and stretch your retirement income.

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5. Purchase Long-Term Care Insurance

Long-term care is a type of insurance that many people don't think about, but it's important to shop around and explore options while you're young and still relatively healthy. Long-term care insurance — which isn't covered by Medicare — pays for future expenses like home care, adult day care, and nursing home care. Some people don't think about getting a plan until they are ready to retire, but premiums are cheaper the earlier you buy.

6. Downsize Your Living Situation

More than likely, you don't need as much space as before. Rather than stay in a house that's too big for you and your spouse, or waste money heating and cooling rooms you never use, downsize to a smaller space. A smaller house payment and cheaper utilities can increase your monthly savings, freeing up cash for paying down debt or increasing your nest egg.

7. Convert a Term Life Policy to a Whole Life Policy

Life insurance is a necessity whether you're young or old. The death benefit paid to your beneficiaries can pay for final expenses, such as your funeral and burial, medical bills, and other debt. Term life insurance is cheaper than whole life insurance, which makes these policies an attractive option. But term policies expire after a certain number of years. A whole life policy, on the other hand, is a permanent policy that never expires and accumulates a cash value.

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Talk to your insurance agent about converting your term policy to a whole life policy. If you make the conversion before the policy expires, you can possibly get the new policy without additional medical underwriting.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website.

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This article is from Wise Bread, not the Kiplinger editorial staff.