What happens to people who make a mid- life change? How are their financial lives and financial goals changed?
Why am I writing about this in a financial planning blog? Because usually money is involved. Sometimes a pretty substantial amount.
It can be in the form of changing careers, changing spouses, moving to a new part of the country, making an expensive purchase.
I’m not here to judge whatsoever, because sometimes a change needs to happen for us to be happy and have meaning in our life.
But I am here to say that a lot of planning has to be given to the long term financial consequences. Let’s break down the big ones from a financial point of view.
Career Change: This one obviously is an income disruption. Might be for the better long term, because there are many qualitative aspects to a career change that outweigh the lost income. But it goes without saying that this one requires a whole lot of planning; the investment in what the new career requires, the planning for a buffer to live off of for the first 2-3 years, modifying retirement age, and retirement plan contributions.
Spouse Change: Usually this decision has nothing to do with money, but there are definite costs to consider and plan for. Knowing what the ramifications will be financially is crucial to ensuring that you have as little surprises as possible and enter the process with eyes wide open.
Big Purchase: New car. New house. These can be great ways to treat ourselves or improve our life. When something as significant as these purchases take place, factoring the total cost of ownership, not just the sale price, helps us better plan and understand any trade-offs required to our other financial goals.
Lifestyle Relocation: This would be more than just buying a house, although that might be part of it. There are moving costs, different daily and monthly expenses (hopefully less), perhaps different taxes.
So there it is. Common sense really, but worth a reminder: Mid-life changes can be worth so much more to us than the financial costs, but preparing and planning for the financial costs and adjustments to our financial goals allows us to better enjoy, or at least be at peace with, the changes we want, or need, to make.