5 Things You Should Know About Financial Wellbeing At Midlife

Here are two truths about midlife: First, you’ve got a lot of years left to travel. That means a lot of years to earn (in fact, you’re likely still in your peak earning years), to save, to invest, and otherwise secure the financial world that you’re building. If you handle all of those things in a planned way, and with care, you can set yourself up for a future that is largely free from many of the stresses money often brings along. Second, you’ve got a lot of years left to travel. That means a lot of years of dreams and goals you want to accomplish, but also healthcare to fund, and potentially more decades on the planet than you counted on. If you botch the opportunity that is staring you in the face right now, it’s going to be difficult – if not impossible – to recover from. These 5 things you should know about financial wellbeing at midlife that will help keep you on track.

  1.     Health and wealth are inseparable.  

There is absolutely no getting around this basic truth.  If you don’t have a strong financial foundation, then any sort of a health emergency is likely to wreak havoc with your finances.  And, although it’s possible to stay healthy in your 20s and 30s (and even 40s) without considerable financial resources, once you hit your 50s and beyond – and start to add people like chiropractors and tests like colonoscopies to the rotation – it’s tougher to stay that way.  What many people don’t realize is that staying healthy is making an investment in your financial future. As Dr. Michael Roizen and I wrote in AgeProof: Living Longer Without Running Out of Money or Breaking a Hip, 70% of healthcare spending goes toward managing chronic conditions from asthma and osteoporosis to diabetes. You can reduce your chances of getting one by maintaining four healthy habits: Avoid toxins, cigarette smoke being the biggie. Get up and move, 10,000 steps a day is a great place to start. Eat foods you love that love you back, avoiding trans and saturated fats as well as simple sugars. And do what you can to reduce stress (more on that in a moment).

  1.     Three things can reduce big money stress.  

According to The State of Women 2022, a survey from HerMoney.com and The Alliance for Lifetime Income, almost three out of five women worry about their money at least several times a month, nearly one third worry several times a week and 14% worry every single day. In fact, only 10% say they have financial stress completely under control. Income doesn’t solve this problem – among those survey respondents with household income about $200,000, almost half still worry several times monthly.  But there are three things that can help ameliorate money stress, according to research from Fidelity Investments. One, create a roadmap – or plan – for your goals. Two, focus on emergency savings. Having a 3- to 6-month cash cushion available means you have the ability to weather a short-term layoff or unexpected repair bill. (Note: If you’re within a couple of years of retirement or already in it, your cash position should be significantly larger – generally 2 years – so that you don’t have to sell investments into a down market.) And three, make sure you’re stashing away at least 10 percent of your income for your long-term future. If you’re having trouble with the latter two, specifically…

  1.     Follow the money. 

Over three decades of helping real people with their real money (often on television for the Today show or on Oprah’s Debt Diet series), I have learned that there is no substitute for tracking your spending.  If you are not watching what is coming in, what’s going out and where it’s going, I can pretty much guarantee that money is slipping through your fingers. That’s the premise of FinanceFixx, the 8-week coaching program  I launched in 2021. Participants work one-on-one with a trained coach as well as with a small group to figure out where their money is going today so that they can take back control and better use their resources to accomplish their real goals.  It’s eye-opening and fun, and it illustrates an underlying principle of the relationship between money and happiness: Once you’ve got enough money to live comfortably, it’s not how much you have that matters. It’s how much control you have over whatever you have that changes lives.

  1.     Longevity is your biggest risk.  

 Basically, it works like this: The longer you live, the longer you’re going to live. What that means is that today, we know the average 65-year-old will live to hit about 84. But that means half of all 65-year-olds will get to 84 and keep on going. One in four will pass 90. One in 10 will pass 95.  The number of Americans who are age 100 or older has gone up 2,200 percent since 1950.  Being ready for that means knowing that you have a plan that will continually provide you with enough to live on – yes, comfortably — in case you are among those centenarians.  It means having a conversation with a financial advisor about whether you should take some of the retirement income you’ve stashed away and convert it to a pension, likely using an annuity (an insurance product) that will provide for you until whenever you die. Or, perhaps use some of the money tucked inside your retirement account to pay for a QLAC, a form of longevity insurance (there are tax advantages for doing so). It means making sure that you’ve got a social security strategy that maximizes your payouts for you and your spouse if you have one, a complicated calculus. And it means examining whether pricey but helpful long term care coverage may make sense for you. Yes, there’s a lot here which is why it’s so important to get some knowledgeable eyes on your picture. Ten years out from retirement is a perfect time for a check-up

  1.     The Joneses no longer matter (as much).  

Finally, let’s turn to your emotions. Investopedia defines behavioral economics as “the study of psychology as it relates to the economic decision making processes of individuals and institutions.” I define it as the study of why smart people do stupid things with money. In other words, we know now, because this field has been parsed in academic institutions worldwide, that there are some financial behaviors that are simply wired in. Two are that, because we’re human, we adapt and we compare. We adapt to how much we have. This is why two paychecks after getting your last raise, you were no longer able to remember how you ever lived on less.  And we compare ourselves to others. Throughout life, the size of your office or make and model of your car, was often not as important in and of itself, but whether it was bigger or higher or newer than the dwelling your colleague occupied down the corridor or the SUV in the driveway next door. Instagram has made billions on this principle. The good news is that research has shown these feelings start to wane as we age.  Just knowing that gives you the freedom – the permission — to establish goals for what matters most to you and then go after them. Do it.

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Jean Chatzky is the founder and CEO of HerMoney.com and the coaching programs FinanceFixx and InvestingFixx. She is the host of the podcast HerMoney With Jean Chatzky and the co-host of the national radio show Everyday Wealth. The Financial Ambassador for AARP, she was the Financial Editor for NBC Today for 25 years. Jean is an award-winning journalist and broadcaster, a New York Times and Wall Street Journal best-selling author, and a fierce advocate for financial literacy.  Her latest books are Women with Money: The Judgment-Free Guide to Creating the Joyful, Less Stressed, Purposeful (and Yes, Rich) Life You Deserve and How To Money, a guidebook for Gen Z women. Follow her @JeanChatzky. 

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