Facing Personal Finance Challenges at Midlife
There are a few common financial challenges many people face at midlife as well as advantages that they may have. A common challenge is that you may find yourself caught between supporting aging parents and kids who are still at home or just heading off to college. A common advantage is that you may be at the height of your earning power. However, this can be mitigated by a couple of things. This is also a time when many people change careers, and while sometimes that is to a more lucrative field, it can also mean taking a pay cut. In addition, your retirement savings might not be what you want them to be.
This may be the first and most important thing that you need to do because your long-term financial stability is resting on it. Do you know how to get on track for retirement from a financial standpoint? How much do you have in retirement? How much do you anticipate receiving in Social Security? What kind of lifestyle do you want to lead when you retire? You might want to meet with a financial planner to look over your situation and help you determine whether you’re on track or if you need to save more aggressively. If you’re 50 or older, you may be able to contribute more to various plans.
Your Children’s Education
Your child is going to college, and you may not want them to take on the burden of student loan debt that it could take decades for them to pay off. There may be other options, including taking out a home equity line of credit if you are a homeowner. A HELOC can offer you flexible access to money based on the value of your home. You can also combine this with other sources of money, such as student loans and scholarships.
Your Aging Parents
Maybe your parents were able to plan for their own retirement and don’t need any assistance from you, but if this is not the case, their financial issues can be a big stressor. As an adult child, you may need to figure out a way to help them while still respecting their autonomy, and the way you need to go about doing this will vary based on your situation and theirs. In some cases, they might just need someone to sit down with them, review their finances, and make suggestions about how they could manage their money more wisely. However, there may also be cases where you need to take a more active role in their finances, such as helping them pay bills or even moving them into your home.
This is a good time to either make an estate plan if you haven’t done so already or to review an existing one. This is not because you can expect your family to need it soon but because this is a time when you may have the most assets and you may also be experiencing several changes. If you have divorced and remarried since you last made a will, you may need to change that and other documents to reflect your new status.