Once you hit middle age, it can be a bit challenging to navigate the next moves in your finances and career.
Should you take a chance on a new job, or stick with your current position?
Do you know when you want to retire?
Are you saving enough for the retirement you want?
Wherever you’re at with your plans, watch out for these common midlife money myths along the way:
Midlife Money Myths #1: It’s too difficult to change careers
Changing careers at any age can be intimidating, but the older you get, the more impossible it can feel. If you’re in your 40s or 50s, you might wonder if it’s worth changing careers, or if it would be too difficult to find a new position.
Here’s the good news: the nature of work is changing. Gone are the days of people sticking to one job, and one company, for their entire career. In fact, data from the American Institute for Economic Research showed that when older workers were surveyed, 82 percent reported that they successfully changed to a new career after age 45.
And today, 11 percent of American workers aged 50 or older would still like to make a career change.
There are also more people than ever going back to college, getting degrees, and investing in their career well into (and beyond) middle age.
According to the National Center for Education Statistics, around 6% of college students are 40 years old or older. That might not sound like much, but it amounts to more than one million college students each year who are middle-aged or older.
As people live longer than ever before, it’s important to consider whether your current position will be right for you for the long-term.
Myth #2: You should plan to retire in your 60s
With more people going back to school or changing careers later, holding off on retiring is becoming more common, too. The average retirement age has been increasing over the past few decades, from 57 in 1991 to 62 in 2024. About 70 percent of working Americans retire before age 70, which means 30 percent are still working beyond that.
And then, there are the un-retirees. They are the people who do retire, but end up returning to the workforce. According to data from Rand, 39 percent of workers 65 and older went back to work after retiring. These numbers show that retirement is becoming a more fluid concept, with many people opting for a “second act” career, side gig or part time work.
There are several benefits that come along with working a bit longer, like continued insurance benefits, socialization, mental stimulation and increased retirement savings. But ultimately, deciding when to retire is a uniquely personal decision for everyone, and it has to work best for your situation.
Myth #3: You should be upgrading your lifestyle
As retirement approaches, it’s especially important to be aware of what you can afford. It might be tempting to upgrade your car, renovate your house or send your children to top private schools, especially if it feels like everyone around you is doing those things.
Try to focus on your own plan, and what will work best for you. That doesn’t mean you can’t have fun or spend money on “fun” things; just make sure they fit into your overall financial goals.
Myth #4: You started saving for retirement too late
Sure, the best time to start saving for retirement might be when you first enter the workforce. But even if you got a late start, you can certainly continue to improve your savings.
The first step is to know what you need. People – especially women – are living longer than ever before, and may not be saving enough to support those additional years.
Healthcare costs, assisted living, travel and general living expenses are all important retirement considerations, and your 401(k) might not stretch enough to cover those costs for as long as you need them to.
Catch-up contributions and additional retirement savings vehicles, like IRAs, can help you increase your retirement savings. Check out our post, Retirement Planning: What Will Work Best for You?, for more information.
Midlife Money Myths: The Bottom Line
For many people, midlife is just the beginning of a brand new chapter. Even if you start a different career right now, you could have 20 years (or more) to dedicate to that path, if you chose to do so.
Whether you plan to retire early or not retire at all, this can be a rich time in your life, full of new experiences and possibilities.
If you want more resources about midlife career and finances, check out some of our previous posts below:
- You Maxed Out Your 401(k) – What Should You Do Next?
- Personal Finance Habits of a Successful Retiree
- Should You Retire Early?
- Money tips for your 40s
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.
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