I recently attended a retirement party for an extremely accomplished woman, who had spent over 30 years as a school administrator overseeing multiple schools.
Throughout her career, her sole purpose was ensuring her students were educated and nurtured, and that they became exceptional adults.
Also in attendance, were her former students…now in their 30’s and 40’s… who took this opportunity to thank her for her tutelage and dedication during their formative years.
At one point during the event, a PowerPoint slideshow of her life was played. It showed photos of her life over the years, especially noting her significant life events, such as: the day she graduated college, her wedding, the birth of her children, and their high school, college and doctoral graduations. The last photos were from the present day, and showed her beginning to enjoy her golden years with her husband, looking forward to what will hopefully be a long, happy and healthy retirement.
The retirement event was not only beautiful and well planned; it was also truly inspiring; and her slideshow pictorial depicted what I suspect, we all experience–life changes. There’s a time to sow, a time to grow and a time to reap.
In life, there may be a point when some of us feel like we are experiencing the proverbial midlife crisis, also now known as a midlife transition. But it’s interesting to note that according to recent studies, only a small percentage of adults actually experience a midlife crisis. Many adults do, however, experience what is known as a midlife ennui or a sense of dissatisfaction and listlessness with life.
The feeling of a midlife ennui can happen as early as your mid-30’s through your early 50’s. There’s no particular age, just a range.
This feeling doesn’t last forever and actually improves as we get older. As long as a person’s basic and psychological needs are met, as represented in Maslow’s Hierarchy of Needs, it’s reported that people begin to feel better in their later 50’s, and most are downright happy well into their 70’s.
From a financial aspect, a midlife ennui can manifest itself in the form of making a significant financial purchase in order to compensate for getting a little older. It can also be a life-altering decision…like changing careers midstream.
Either way, any life-changing thoughts that occur during a midlife ennui should be considerably weighed and measured.
The financial decisions made during this time can have a significant impact on your financial future. One of our main end goals should be to confidently have a retirement that is well-planned and financed.
How to avoid these midlife financial pitfalls?
There may come a point in your life were you say to yourself: “I deserve to buy the car, boat, motorcycle, RV, etc. of my dreams.”
I’d say there’s nothing organically wrong with these thoughts…if you are saving properly in all of your accounts (personal savings and retirement). If you have no unsecured debt and can afford to easily treat yourself without it affecting your monthly expenses and savings regimen, then consider going ahead and making the purchase. However, if making this purchase will put your personal finances under undo stress, then please avoid doing so.
If a particular car is the object of your desire, then one way to purchase your dream vehicle with a lower monthly payment than financing is to lease it. This option works if you will:
- Drive 12,000 miles or less per year in the car
- Lease it for 36 months or less
- Find a lease deal that requires a low to no down payment
- Have excellent credit to take advantage of exceptional lease deals
By taking this option you can satisfy your desire to drive your dream car for a finite period of time and then return it to dealer at the end of your lease term. For more details on the advantages and disadvantages of leasing vs. buying a car please see my May 2016 article.
There could also be a number of reasons a person may want to upgrade to a house with more square footage, modern fixtures, newer appliances and dazzling décor. If you find that you feel you are in need of a change and have the financial wherewithal to make it happen, then consider upgrading to a larger home. Moving to the house of your dreams can be an emotionally fulfilling experience in life.
However, as the old saying goes … “you don’t want to be house poor.” If moving to this larger, more expensive home generates a mortgage payment (which includes principal, taxes and insurance) that is greater than 28% of your income before taxes, then buying this home is probably not right for you at this time.
Of course, larger more expensive homes have financial benefits. These types of homes in a thriving neighborhood will appreciate faster and create more home equity over the long run than a smaller home.
In all, I wish you a long, fulfilling and joyous life where you can enjoy the fruits of your labor while making wise personal financial decisions especially in retirement.
Ms. Dakar is the author of The Busy Person’s Guide to Personal Finance, a primer to help consumers manage their finances so they can build a substantial nest-egg. She also conducts personal finance seminars where she provides concepts to attain overall financial health.