Empty Nester Finance Guide
When the last child leaves home, your financial picture changes. The home that suited a family may now be bigger than you need, your insurance needs change, and you may have more income to put towards the mortgage or retirement savings. It's a good time for a full financial review.
By Better Rate Mate Editorial Team · Last reviewed
1Key financial priorities
Reassess whether your home still suits you
Many empty nesters find they're maintaining more space than they use. Downsizing can clear the remaining mortgage, free up money for retirement and cut running costs. If you're 55 or older, the downsizer contribution lets you and your spouse each put up to $300,000 of the sale proceeds into super, subject to the ATO's conditions.
Pay off your mortgage faster
With lower household costs you may be able to repay faster. At 6.23% (the RBA's August 2026 average for new owner-occupier variable loans), paying an extra $1,000 a month on a $400,000 balance with 25 years to run clears it in about 13 years and 8 months instead of 25 years, and saves about $195,000 in interest. Run your own numbers with our mortgage repayment calculator.
Review and reduce insurance costs
Your life insurance needs fall when your children become financially independent. Check that your cover matches what you'd actually need, and reduce or cancel cover you no longer need.
Make the most of super in your final working years
The concessional contributions cap is $32,500 a year from 1 July 2026 (ATO). If your total super balance was under $500,000 on 30 June of the previous year, you may also be able to use unused cap amounts from up to five earlier years.
2Loan types to consider at this stage
Variable rate (pay down fast)
For faster payoffA low-fee variable loan with unlimited extra repayments lets you put surplus income straight onto the mortgage.
Fixed rate (short term)
Consider if near retirementFixing for two or three years gives certainty as you approach a fixed income. Check the break costs first if you might sell or pay the loan off early.
Smaller loan after downsizing
If you downsizeA smaller loan on a cheaper home lowers your LVR, which can mean cheaper pricing, or no loan at all.
3Insurance needs at this stage
- ✓Review life insurance: once children are independent and the mortgage is shrinking, your cover may be more than you need
- ✓Health insurance becomes more valuable with age; check that your hospital cover still fits
- ✓Income protection: within 10 years of retirement, check whether the premium still gives you value
- ✓Home and contents: reassess replacement value now the children have taken their belongings
- ✓Travel insurance that covers pre-existing conditions, if you plan to travel
4Common mistakes to avoid
- ✗Paying life insurance premiums sized for when the children were young and the mortgage was large
- ✗Missing the chance to carry forward unused concessional super contributions
- ✗Downsizing without considering the downsizer contribution
- ✗Redrawing on the mortgage to fund lifestyle spending, undoing years of extra repayments
- ✗Putting off a rate review because refinancing feels complex
5Tips for getting a better rate
- 1With a lower LVR you may qualify for a lender's cheaper pricing bands
- 2Ask your lender to match a better offer from another lender
- 3Compare energy plans now that your usage has changed
- 4Review insurance bundles and drop products you no longer need
- 5Use our mortgage repayment calculator to see when you'll be mortgage-free
Common questions
What is the downsizer contribution?
If you're 55 or older and sell a home owned for at least 10 years, you and your spouse can each contribute up to $300,000 of the proceeds to super, within 90 days of receiving them. It doesn't count towards the contribution caps (ATO).
How much interest does an extra $1,000 a month save?
On a $400,000 balance with 25 years to run at 6.23%, about $195,000, and the loan is paid off in about 13 years and 8 months instead of 25 years. The saving depends on your rate, balance and term.
What is the concessional contributions cap?
$32,500 a year from 1 July 2026, up from $30,000 (ATO). Concessional contributions include employer contributions, including salary sacrifice, and personal contributions you claim as a tax deduction.
