5 Don’t Dos for Protecting Your Finances During the Mid-Life Years

By Marc Shaffer

There are countless articles for people nearing or in retirement, and just as many for young people starting out on their financial journey. But some of the most critical years can be the middle-age ones. It’s a long stretch of years where things seem to just “move along.” However, there are so many major decisions made and actions taken during these years, along with the overall choice of how you live your life, that have an impact on your finances. Don’t overlook these coasting years.

Don’t Overlook a Spending Plan: Although having an updated, working budget would be ideal, having at least something in place that takes into account your financial goals and income/expenses is critical. Without one, you could be derailed by emergency expenses or find yourself with excessive debt.

Both situations can have crippling after-effects if you can’t build yourself back up. This is also an area where lifestyle creep (you make more but also spend more, so you don’t really get ahead) can bite you.

Don’t Ignore Inflation: In recent years, we have seen normal daily purchases skyrocket. Image how much inflation you might encounter in a 25 year mid-life span. Inflation can impact your purchasing power, the real cost of debt, and the value of your cash savings over time. Use these years to diversify and look for investment opportunities that could outpace inflation. Make your money work for you.

Don’t Ignore Retirement Savings: These are the years to fight the “burning a hole in my pocket” feeling of money. You’ll likely start bringing in an income that increases regularly and will face many situations where you can spend that money. Pay your future self first by ensuring you have retirement plans and savings accounts prepared to meet your retirement needs.

Most people are surprised to find that simply maximizing your employer provided retirement plan account doesn’t guarantee that you are on track for financial freedom.

Don’t Ignore Your Own Financial Well-being: It’s possible that two generations could inadvertently derail your financial future during these years: your children and your parents. Having to take care of their needs, be it with loans, funding their lifestyle or emergency needs, or paying for major milestones like a wedding or gifting a house down payment, can all leave you in a vulnerable place.

If these are costs you plan to cover, make sure you’re accounting for them in your financial plan and that saving for them doesn’t cause you to not save in other areas. It’s also ok to say “no” to friends and family when they ask for your support.

Don’t Feel Alone: A financial advisor can help you stay on track during these years and avoid potential pitfalls. They can help you determine a mix of investments that fit your goals and risk tolerance. They can also remind you of important tasks such as estate planning and insurance needs, and can help you factor in major purchases, inflation and healthcare, among others.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on May 9, 2024 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.