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How To Put Your Financial House in Order in Midlife

By Jennifer Thompson

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July 17, 2020

Women and Midlife

 

Jennifer Thompson Compelling 365

Photo by Pam-Sharpe

 

Midlife is the time between the ages of 45 to 65 Your children are either close to leaving the nest or have left the nest. You’re on your second or third career.

According to data from the National Center for Health Statistics and U.S. Census Bureau the divorce rate amongst people age fifty and older has doubled in the last twenty-five years.

Very likely, midlife is also a time where you would be on your second or third marriage.

Midlife is a time of transition.

It is also a time to start planning for retirement, which means, it’s time to put your financial house in order.

 

 

 

 

Where are you at, financially?

 

  • Are you living with ease, financially?
  • Do you have an idea of what your goals are?
  • And when you would like to achieve them?
  • Are they aligned with what you value?
  • Regarding your partner. Do you know where they are at, financially?
  • Do you have a contingency plan in place – like an emergency fund set aside?
  • Is your estate plan set up?
  • Do you have a budget in place?
  • Is your financial advisor aware of your values and objectives?
  • Do you have a retirement plan in place?

If you answered “No” to at least three of these questions, then this article is for you.

 

What you need to do to put your financial house in order

 

Jennifer Thompson Women and Money

 

Have a vision for this second half of your life

By the time you hit midlife, you would have heard it all! The messages of what you’re supposed to do and who you’re supposed to be. For many women, this would have meant supporting their spouses, raising their children, while pursuing a career. Midlife is a time of introspection and questioning – what’s next?

Your midlife is a significant time because you realize that you have already lived half of your life and your mortality starts to become a reality in a way it may never have before. Renowned sociologist Dr. Brene Brown describes midlife as a time when the universe grabs your shoulders and tells you “I’m not f-ing around, use the gifts you were given.”

 

How to Achieve What's on Your Bucket List

Photo by Glenn-Carstens-Peters

 

Prepare a written plan for the second half of your life. List your goals for the next 3, 5, and 10 years. How would you like to live this second half of your life? What would you like to do? Where would you like to live? Who would you be living with? These questions take on a greater sense of urgency in midlife.

 

Women and Money

Photo by Alexander-Mils

 

Take charge of your finances

 

Jennifer Thompson Compelling 365

 

UBS poll was done in 2018. Of the 3,652 women surveyed around the world, 58% defer long-term financial decisions to their spouses. Most women would have left major financial decisions for their spouses to make. 85% of these leave financial decision making to their husbands because they believe their spouses know more about financial matters than they do. Yet, 80% of women will end up alone either through the death of their spouses or through a divorce.

In the US the average age of widowhood is 55. By age 56, 75% of women in the US would be widowed. From that same UBS poll, 98% of divorcees and widows would advise other women to take an active role in finances now. Women must play an active role in their finances.

Do you know where you stand financially? Are you confident in making financial decisions on your own? Learn how to make financial decisions you can live with.

Know where it’s going

 

Jennifer Thompson Compelling 365

 

If you have always left your spouse to handle the finances, then you may not be clear where your money is going. You may have a sense of things but it pays to know exactly how much is coming in and what’s going out. Is more coming in than going out?

Do you have a budget? Are you aware of how much debt you have? Are you aware of what you have in investments? How are they allocated and what level of risk are you at?

Pay off debts

Do you carry high-interest, unsecured revolving debt? Make a plan to pay it off as soon as you are able to. Double up your payments each month or cut down on your expenses. You want to avoid carrying unsecured debt into your retirement. If you are unable to pay off high-interest debt, transfer it to a low-interest alternative. Or if you are able to, consolidate it all in a secured loan.

What about your mortgage? Where are you in regard to your mortgage? How much longer have you got before you pay off your mortgage? Are you able to double up your mortgage payments?

 

Invest

 

Jennifer Thompson Compelling 365

Photo by Carlos-Muza

 

Inflation has the effect of eroding your savings. Investing is the best way to keep up with the effects of inflation on your savings. All investments fall under one of four asset classes – stocks, bonds, cash, and alternative investments (eg. bitcoin, gold, art). What proportion of your money you invest in each of these is dependent on:

  • What you’re investing for.
  • The length of time you’re investing.
  • And your tolerance for risk.

The biggest mistake people make is when they invest in short-term vehicles for long-term goals. Or they invest in long-term volatile investments for short-term goals. An example is investing all your money for retirement in term deposits or municipal bonds. Your retirement years may exceed thirty years. Investing all your retirement funds in short-term vehicles providing a return of one or two percent, will not allow the growth your money needs to last thirty years.

Health Insurance

 

Jennifer Thompson Compelling 365

Photo by Richard-Catabay

 

As you age, health care may, at some point, be an area of concern. Yet, it is an expense that people often forget in retirement planning. Have you made plans for a possible increase in health care expenses? Better yet, be proactive, and adopt a healthy lifestyle. Prevention is better than cure. Don’t wait till you are ill before you make the necessary changes.

If you are currently benefitting from your spouse’s health insurance, read the fine print regarding the coverage once your spouse retires. Planning on changing your job, find out what the benefits are before switching companies. Intending to start your own business? Research, and compare private insurance providers.

 

Start Planning Your Retirement

No matter how far you are from retirement, you need to have a written retirement plan. In it, you should have a list of your expected sources of retirement income.

  • Pension (from your employer)
  • Registered Plans
  • Non-Registered Investments
  • Government pensions
  • Part-time work
  • Sources of passive income

 

You can’t take it with you – plan your estate

 

Jennifer Thompson Compelling 365

Photo by Rhodi-Lopez

 

Do you have an estate plan in place? One that reflects your wishes for how you want your assets distributed once you die? A good estate plan should communicate your wishes for how you want to divide your assets. It comprises of

  •    A Will                                                                                                                                                         
  •    An Enduring Power of Attorney
  •    A Living Will or Health Directive

 

A Will

A Will is a legal document a lawyer prepares. It states your wishes for who gets your assets when you die. It also names your executor, the person who will carry out the terms of your will.

A Power of Attorney 

A Power of attorney is a legal document you sign granting a person (s) the authority to manage your money and property on your behalf if you are no longer mentally able to manage it yourself. This could be caused by illness or disability.

A Living Will

This is a document that allows you to specify “end of life” care ahead of time. What kind of medical care would you want if you were no longer able to express your wishes? It is a way to tell your wishes to healthcare professionals to avoid confusion later on. It also explains which treatments you want if you’re dying or unconscious. When planning your estate you need to ask yourself, how you would like people to remember you after you die.

 

This post contains affiliate links. I may receive a commission for items purchased (at no extra cost to you).

 

Additional Resources

 

Budgeting and managing debt, you may want to look at complete debt relief.
Estate planning, you can read my article on Dying Without a Will.
Managing your debt, you may want to look at Dissolve Your Debt.

 

 

Naked Retirement package bundle

 

Through one on one coaching, webinars and public speaking Jennifer helps people discover how to live life on their terms. After twenty years in banking and finance, she discovered another passion – a passion for writing. She has written numerous self-published books on money: Women and Money: 7 Principles Every Woman Needs to Know to Be Financially Prepared in Any Economy and Growing Up With Money: Raising Financially Resilient Kids in an Age of Uncertainty. Jennifer can be reached at jenniferthompson@compelling365.com

 

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1 Comment

  1. Margareta

    Excellent blog you have here but I was wondering if
    you knew of any message boards that cover the same
    topics talked about here? I’d really love
    to be a part of group where I can get comments from other experienced individuals that share the same interest.
    If you have any suggestions, please let me know. Thanks!

    Reply

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