Mid Life Crisis and Financial Independence

In Financial Planning by Gunjan Massey2 Comments

Arriving in your 40s is termed as mid-life crisis for both men and women. For many, it brings life into perspective. While youth is now behind you, you are still young, healthy, and vibrant. Your world now seems book-ended by the older folks, people belonging to the generation of your parents, and children who are growing around you. Naturally, at this stage in life financial planning suddenly becomes urgent and crucial as your long-term responsibilities become more and more obvious. You start thinking about the time when you will no longer be working, and retirement beckons.
Mid-life is the time to consider financial independence for the rest of your life. That way, you will be able to maintain the same standard of living that you enjoy today even during the post-retirement years.

Time to opt for better insurance

You may be carrying a suitable insurance cover, still is it enough to see you and your family through in case of an emergency? Term insurance is a good choice for you especially when you have a non-working spouse and young children completely dependent on your income. When you are in your 40s, there is still enough time for you to provide for the untoward situations. This way, even if something happens to you, your family will have something to fall back on.

Minimize Consumer Debt

There should be no more revolving debts for you, once you reach your 40s. When you are young and earning a low-income, credit cards may prove to be your savior from time to time. But once you reach your middle age, this is no longer the choice. If you still maintain credit cards and purchase without proper financial evaluation, you may be in for a fall. In order to gain financial independence it’s important to have substantial savings. Sadly, it is not possible when your revolving debts keep mounting.
From now on, maintain only a single card and use it only when you are travelling or when it seems an absolute must.

Maximize the Tax Breaks

Mid-life is a time when you need to maximize tax savings to allow your corpus to grow substantially. Consider only those investment vehicles which guarantee maximum savings, such as mutual funds, bank FDs, PPF or Post Office MIS scheme. This way, attaining your financial independence will not be difficult. To save taxes significantly, simply increase your investments related to different saving vehicles.

Long Life Investment

In spite of mid-life crisis, you may be at your productive best and the days of income uncertainty are finally over. So now, your investments should be done in view of a long life. Today financial planners advise their clients to take average life expectancy at 90 and then proceed with the savings. One problem may be outliving the amount you save. It is possible to avoid it with judicious investment in retirement, balanced portfolio and re-balancing as you age further.

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