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Family Finances

Smart Moves for Life's Big Events:
Moving Into Midlife

When the kids are launched on their own, it's time to refocus on your needs.

Your last child just moved out, and you've spent the first few minutes of your new life bopping around the house playing air guitar. Now it's time to get serious about your next phase.

Take stock of your savings. Between college expenses and that little matter of the bear market, your retirement nest egg probably isn't as big as you hoped it would be. To find out what you need to save monthly to catch up, use our retirement-savings calculator.

See our infographic on managing your peak earning years.

Aim to replace 85% of your preretirement income. Then pump the necessary amount into your retirement accounts, starting with your 401(k). You can contribute up to $16,500 a year in pretax dollars ($22,000 a year if you are 50 or older by year-end) to this employer-based account; be sure to kick in at least enough to get any company match. For both traditional and Roth IRAs, the annual limit is $5,000 ($6,000 if you are 50 or older by year-end).

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Re-up your life insurance. Like any responsible parent, you beefed up your life insurance when the kids came along, figuring you would drop the policy once they became adults. If you purchased a term-life policy that locked in the rate for 20 years, that clock may be about to run out. Dropping the policy puts money in your pocket, but you may want to extend coverage if you are still paying a mortgage or other debt, or if your retirement savings went south during the recession. A 50-year-old man who is healthy can pick up a 20-year term policy with a fixed rate and a $500,000 death benefit for $940 to $1,200 a year. A healthy 50-year-old woman would pay $680 to $830 a year for the same coverage.

Kiss the 'burbs goodbye. Why linger in East Updike when you can trade the big house and hellish commute for sleeker digs downtown? Cities around the country have buffed up their central business districts and paved the way for new or renovated condo complexes geared toward older couples sans kids. In Seattle, you can pick up a two-bedroom, two-bath condo downtown with spectacular views of the city and Mount Rainier for $540,000. A one-bedroom, one-and-a-half bath pied-a-terre in the historic, lavishly appointed Commerce Building in downtown Houston runs $390,000. In Minneapolis, $350,000 will get you a two-bedroom, two-bath condo with 14-foot ceilings and wood floors. Most appealing amenity common to all these buildings: no grass to mow.

Rethink your career. With the kids up and out, this could be your chance to switch from full-time to part-time work -- or the other way around -- or maybe pivot to a more meaningful job altogether. Over the next decade, opportunities for so-called encore jobs -- those that combine personal fulfillment and social impact with a paycheck -- will be most plentiful in education, health care, government, the green industry and nonprofits, according to a 2010 report by the MetLife Foundation and Civic Ventures.

If you prefer to get a preview of that second career or simply want a break from your current one, take a sabbatical and become a volunteer. Or try for a fellowship. A new, still-small program sponsored by Civic Ventures matches experienced older workers with social-purpose organizations, such as schools and environmental groups. For a list of other public-service fellowships, including those for mid-career professionals, go to www.idealist.org/en/career/fellowship.html.

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Give in to a midlife splurge. Now that you're no longer shuttling kids to their games, why not trade in the minivan or SUV for a fuel-efficient car -- or even a sporty convertible? Switching from a Honda Odyssey to a Toyota Prius would slash annual fuel costs by $1,500 a year, assuming you drive 15,000 miles. Moving to a Mazda MX-5 droptop would save only about $360 annually.