Planning Tips for Middle Age

Are you reading this in your car while your kid is honing her soccer skills or rehearsing for the school musical? Perhaps you’re in the carpool line. Maybe you’re online to get some answers to help your parents with their Medicare paperwork. If you’re in the sandwich generation, then this article is for you. Here are the financial planning topics that are timely to those of us who are middle-aged.

Check that emergency fund

This is always a good idea. But if you’re helping your kids and your parents, having cash on hand for surprises is critical. Remember, the goal is typically to have enough to cover three to six months of living expenses.

Review your retirement projections

Depending on when you expect to retire, you may only have one or two market cycles remaining during your accumulation phase before you transition to spending your savings. Here are the questions to ask yourself (or your advisor): 

Am I saving enough? Make sure you’re utilizing all available employer matching opportunities. Are there other ways you should be investing your money?

Does my portfolio reflect my risk tolerance? The old Wall Street saying is that if you don’t take the time to rebalance your portfolio, the market will do it for you. We all have a high-risk tolerance when the market goes up. The last few weeks have been volatile to the downside. Has that affected your thoughts about your portfolio?

Assess your debt

Are you comfortable carrying a mortgage into retirement? If you’re 50 years old and refinance for 30 years, does that make sense for your plan? It could! But take the time to consider what sort of cash flow situation you want to bring into retirement.

Review your will and insurance

Hopefully, you did some contingency planning in your younger years by getting life insurance and writing up an estate plan. If you’re reading this, congratulations! You haven’t needed either of these things. But, having a good will (along with durable power of attorney and medical healthcare powers of attorney) is always smart. However, your life may have changed since the last time you went through the process. Is it time to make some updates?

Life insurance can serve many different purposes. Mainly you’d like to have it in case something happens that prevents you from accumulating the money you would typically have tucked away by working and saving. You may be approaching a phase in life where you no longer need life insurance.

Middle age is a good time to consider your umbrella policy too. Having inexpensive liability coverage equal to your net worth protects you in the event of an unexpected lawsuit.

Have you thought about long-term care insurance? If that type of coverage is prudent for you, constantly getting it before you turn 60 means cheaper premiums. though these savings can be offset by the greater number of years you end up paying.

Review your college savings plan

If your youngsters are touring campuses, soon you’ll be called upon to write some pretty big checks. If you had the foresight to put money in a college savings account over the last 10 to 15 years, chances are the market has helped those accounts grow. Would a market downturn affect your ability to cover tuition? It may make sense to start moving some of that money into more conservative investments. Furthermore, beginning to understand how financial aid works in higher education may inform whether you continue to save. Remember: you can borrow money for education. You cannot borrow for retirement. Keep your priorities in line.

Understand your parents’ situation

People commonly fear that asking mom and dad about their finances is off-limits. But bringing it up in the context of trying to get your arms around your own financial responsibilities can make for some meaningful and illuminating conversations. If an aging adult in your life is dependent on your help, the sooner you know, the better.

Consider your fitness and nutrition goals

Perhaps this speaks for itself, but what good will retirement be if you’re plagued with health problems? Being active and happy in retirement is more than saving and protecting your assets. Your health and mobility will be key to enjoying all the other work you put into making a successful retirement possible.