For 48-year-old Rowan Childs of Wisconsin, a recent divorce turned her financial life upside down.
“At first, I was really nervous and I had a lot of anxiety about it, but finally now I feel a lot more empowered,” Childs told CBS News.
Like others in their 40s, Childs, who runs her own nonprofit, was already worried about juggling personal debt and putting her two children through college. She then joined roughly half of married women her age in the United States who have dealt with divorce, a potentially life-threatening seismic event. retirement planning.
“This has completely changed my initial view, you know?” Childs said. “…Where will I be in my 60s or 70s or 80s?”
Childs said retirement wasn’t necessarily something she thought about when she first got married.
“It was too far, I think,” Childs said. “Definitely watching what my parents were doing, though, it was definitely something I was watching.”
Teresa Ghilarducci, a labor economist at the New School for Social Research in New York City, has a thought-provoking perspective.
“People who are in their 40s and 50s will do worse than their parents and grandparents,” Ghilarducci said.
Ghilarducci explains that these two older generations could at least count on government-sponsored retirement programs.
“Two generations, because people had grandparents who lived through an expansion of Social Security and Medicare,” Ghilarducci said.
Both programs now they face each other funding challenges, something Childs considered when he had to make a series of difficult financial decisions. The most expensive was buying her ex-husband’s share of their Wisconsin home by borrowing more than $100,000 from your 401(k).
It was a decision motivated in part by a desire to keep her daughter in the same school district.
“To me, it didn’t make sense to sell the house and then buy a house in the same school district, probably even more so,” Childs said.
Borrowing from a retirement plan, as Childs did, should be a last resort, because if you lose your job, the loan must be paid in full or you may have to pay taxes and penalties. And if you’re in your 40s, paying for a child’s college should take a backseat to protecting your own savings. It may seem like tough love, but otherwise you might end up trusting your kids later.
“I jokingly told my kids I could live with them,” Childs said. “… My son said, ‘Well, maybe I could live close by.'”
The key in your 40s is to breathe deeply, no matter the challenges.
“Relax,” Ghilarducci said. “Retirement planning is best done in the daytime, not in the middle of the night. And when you wake up, take some action. Worrying is not action.”
With plenty of time to recover, Childs says she’s finally stopped worrying.
“Maybe working longer could be on the table,” Childs said. You also have the option of working part-time later in life.
“I think outside the box,” he adds. “…I don’t necessarily know exactly how I’m going to get there, but if I see something, or that’s what I want, I’ll often find a way.”
