STAGE THREE: MIDDLE AGE
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Everything is Changing, Yet I Feel Stuck! What’s Going On?
Middle age is a time of transition for everyone around you. Your children are now adults and your parents are much older; perhaps needing more of your attention. Between the cost of living, paying for your kids’ college and funding your retirement, the demands on your paycheck have never been so high. This may cause you to feel like you’re on a treadmill you can never get off. This is a great time to sit down with one of MHV’s Investment & Retirement Representatives to help you prioritize your finances.
That’s one reason it’s crucial to get a grasp on your finances and prioritize spending. One major decision for people in early middle age is between weighting savings toward your child’s college expenses or retirement.
- While it’s ideal to do both, if your resources are limited, many experts recommend opting to fund your retirement. You can always borrow for college expenses by applying for a low-rate MHV Student Loan. You can also consider deferring retirement, since the longer you work, the more money you'll earn and the later you'll need to dip into your retirement savings.
- What course of action you choose depends on your individual circumstances. You should consider how many children you have, how many years you have left to save before college, how close you are to retirement, and how much you already have invested in a retirement fund.
- Feel empowered to make smart funding decisions by using our exclusive customized college planning tool. Compare costs between schools and find scholarships your child can qualify for in minutes.
- You might also consider consulting with an MHV Investment and Retirement Representative on this subject.
At this stage in your life your parents may be getting to an age where they need extra assistance from you. If your family is small or scattered widely, you could end up taking on the role as their primary caregiver. Gain peace of mind from starting the process now.
- As difficult as it may be, it’s never too early to start a conversation with them about their end-of-life wishes. It’s best to discuss delicate matters such as finances and wills while they are well and independent, before it becomes a crisis. Some topics to cover are:
- Do they have long-term care insurance? Should they?
- What sort of retirement income are they looking at?
- If the time comes when they can’t live alone, what options are they willing to explore?
- What are their medical care decisions, and who will carry them out? Do they have a living will or health care proxy? Should they?
- What are their burial/cremation preferences? Have they already made and/or prepaid for arrangements?
- You also need to know where key items are located, including
- Financial information (bank and investment accounts and real estate holdings)
- Legal information such as wills, durable power of attorneys, health-care directives, etc.
- Insurance policies, including policy numbers and company names
- Names and phone numbers of attorney, accountant or other professional service providers
- Other important items, including keys to safe-deposit boxes
Adjusting to life as an empty-nester can be both exhilarating and distressing. Without the distraction of teens with their needs, schedules and general noise level, you may find yourself having to get reacquainted with each other and figuring out who you are as a couple.
- One important step to take together is to re-examine your financial planning. You may want to consider liquidating assets to increase cash flow for school expenses or transferring investments into your child’s name to save on taxes. To help ease your financial burden make sure you take advantage of any educational tax breaks. Encourage your child to work, even while attending college, to prepare a realistic budget, and to use cash and credit wisely.
- And don't forget about health care planning. You can keep your college student on your own plan (while eligible dependent children are usually cut off at 19, full-time students are usually covered until age 23-26). If they are ineligible for your plan, look into student health insurance options or enroll him or her in their college’s plan.
Whether it is through the death of a spouse or a divorce, starting over is difficult enough emotionally. Remarriage may seem like the end of your difficulties, but it’s actually a time when you need to examine your priorities and finances carefully with your intended spouse.
- Even if you’ve never considered signing a prenuptial agreement, you should know they aren’t just for celebrities – especially if one or both of you has significant assets, business interests, or children to consider. Such an agreement will protect everyone’s legal rights if you separate or divorce.
- Chances are, each of you will bring at least some assets and debts into your new life together. Keeping them separate protects both of you. Separate assets may be used to take advantage of exclusions to estate taxes, and separate ownership protects each spouse from losing his or her assets to the other spouse's creditors due to debt.
- Marrying someone with children adds unique challenges to the mix. Not only will you suddenly be responsible for parenting responsibilities, but you may have to deal with the financial drain of child support. If you should decide to adopt your spouse’s child, you could even be responsible for child support payments in the event of divorce.
- Make an appointment with an MHV Investment and Retirement Center Representative to look at your combined portfolios with an eye to keeping the aggregate diversified.
- This is also the time to revisit your insurance policies; you may be able to save money by eliminating duplicated coverage. And, of course, make sure the correct beneficiary is named on any existing policies. MHV offers insurance products at competitive rates for all of your needs.
If you formed a plan early in your working life and have made consistent deposits to your retirement investments you should be in good shape. If not, you can still take action to be sure you will meet your living expenses upon retirement.
- You’ll want to review your investment vehicles with an MHV Investment and Retirement Representative and start shifting assets away from riskier, growth-oriented accounts to more secure ones.
- This is the time to start maxing out your contribution toward a 401(k) through your employer. After that, if you’re eligible, you can start contributing to an individual retirement account. You can also consider securities and other vehicles.
- Funding the additional savings may be easier than you think. As your kids gain independence your cost of living should drop. Use that saved money, along with any contributions you were making to college funds, to build up your retirement portfolio. Keep in mind, if realizing your savings goals means making some lifestyle changes consider it an excellent investment in your future