For those in their 40s, navigating finances should mean putting an emphasis on retirement
For Rowan Childs, 48, of Wisconsin, a recent divorce turned her financial life upside down.
“At first, I was really nervous and anxious, but ultimately I feel more empowered now,” Childs told CBS News.
Like others in their 40s, Childs, who runs her own literacy nonprofit, was already worried about juggling personal debt and saving for college for her two children. She then joins the roughly half of married women in the United States her age who have experienced divorce, a seismic event that can jeopardize it. retirement plan.
“It completely changed my original vision, you know?” Childs said. “…where will I be when I’m in my 60s, 70s, or 80s?”
Childs said she wasn’t necessarily thinking about retirement when she first got married.
“I think that’s too far,” Childs said. “I do watch what my parents are doing, though.”
Teresa Ghilarducci, a labor economist at the New School for Social Research in New York City, has a sobering perspective.
“People in their 40s and 50s are going to do worse than their parents and grandparents,” Girarducci said.
Girarducci explained that the first two generations could at least rely on government-sponsored retirement plans.
“Two generations, because people’s grandparents lived with the expansion of Social Security and Medicare,” Girarducci said.
These two programs now facing The challenge of funding was something Childs considered as he had to make a series of tough financial decisions. The most expensive one involved borrowing more than $100,000 from her ex-husband to buy her share of her ex-husband’s home in Wisconsin. Her 401(k).
Part of the decision was driven by a desire to keep her daughter in the same school district.
“It doesn’t make sense to me to sell the house and buy a house in the same school district, maybe even higher,” Childs said.
Borrowing from a retirement plan, like Childs did, should be a last resort because if you lose your job, the loan must be repaid in full or you may have to pay taxes and penalties. If you’re in your 40s, paying for your children’s college expenses should take a backseat to protecting your own savings. This may feel like tough love, but otherwise you may end up relying on your child later on.
“I jokingly told my kids I could move in with them,” Childs said. “…My son said, ‘Well, maybe you could live nearby.'”
The key to your 40s is to breathe deeply, no matter what challenges you face.
“Relax,” Girarducci said. “Planning for retirement is best done during the day, not in the middle of the night. When you wake up, take some action steps. Worrying is not action.”
With plenty of time to get back on her feet, Childs said she finally stopped worrying.
“Maybe consider extending the hours,” Childs said. She also considered the possibility of working part-time later in life.
“I think outside the box,” she added. “…I don’t necessarily know exactly how to get there, but if I see something, or that’s what I want, I usually find a way.”
