Older sets love to toss around the term “millennials” to
describe naive young adults who have yet to meet the big, mean world outside.
The truth is, the oldest millennials are now turning 40. They’re doing things
like retiring from 20-year military careers, managing their parents’ finances
and filling out college applications for their own children.
Like all those who came before, today’s 30-somethings likely
feel some trepidation about staring down the big 4-0 — and if they’re not
prepared for the pressure, they could stumble wallet-first into a financial
mid-life crisis. Passing your prime and staring down eternity is hard enough
without suffering self-inflicted financial wounds. Here’s what the oldest
millennials need to know.
Don’t Let the Fear of 40 Stoke Fantasies of a Trophy
Some people squander their savings on a Corvette in middle
age because they always wanted one and they can finally afford it. Others do
the same thing with a business. Starting a business at 40 can be great, but
starting a business because you feel like you should be a business owner by now
is always a recipe for disaster.
“If you are thinking about finally starting your dream
business, do so intentionally,” said Kenny Senour, a certified financial
planner with Millennial Wealth Management. “Make sure you have adequate cash
savings in place, little to no debt and that you see a path to economic
Your personal and financial position, not your age, will
determine your readiness.
“Being a business owner can be a great path to independence
and better income over the long run, but do not use a certain age or a midlife
crisis as the main reason to start your new business,” said Senour. “You still
have plenty of time to take that next step and making sure your business is
started on solid ground will benefit you in the longer term.”
Look At Middle Age as a Second Chance at Retirement
Once you sleep off your 40th birthday celebration, you
should return to the world with the next phase of life on your mind —
“While retirement contributions are important at every age,
millennials may not have prioritized these contributions earlier in life as
they worked on saving for major life expenses,” said Sam Zelinka, who runs a
personal finance website for federal employees called GovWorkerFi and who
self-identifies as “one of the geriatric millennials approaching the age of
Zelinka said that expenses like weddings, down payments and
daycare often force young people to shelve retirement planning. If this sounds
familiar, don’t worry — middle age offers an opportunity to regroup.
“Even if you have not started saving for retirement, you
still have 25 years until traditional retirement age,” Zelinka said. “Sitting
down and planning your retirement strategy is an important step you can do to
make sure you avoid a financial midlife crisis.”
If You Have Children, Plan Like a Grown-Up
Entering middle age is stressful enough, but that stress is
magnified when you include the responsibility of raising a family.
“That’s why it’s important to take advantage of all the ways
you can save and invest more for your children,” said Kimberly Hamilton,
millennial money expert and founder of Beworth Finance. “Invest for their
education using a tax-deductible 529 account, take advantage of the IRS tax
child credit payments and start a sinking fund for things like childcare,
back-to-school supplies and family vacations. Setting these accounts up early
will help you feel much more in control, giving you more time and mental headspace
to enjoy with your family.”
When it comes to financing your children’s education,
however, there are lines that shouldn’t be crossed.
“Your children (may be) getting close to college age,” said
Denise Thomas of Get Ahead of the Class. “Don’t co-sign for your child’s
college loans. Plan ahead instead since co-signing makes the loan 100% yours
just as it is 100% your child’s. When you co-sign for your child’s student loan
it significantly reduces your buying power and can adversely affect your credit.”
The Time To Plan for Old Age Is Now
Millennials might still feel young at age 40, but like it or
not, physical decline awaits on the other side of the hill. If you don’t plan
for it, your loved ones will pay the price.
“You should have an updated and accessible estate plan,
which at a minimum should include a medical and financial power of attorney and
a will,” said Mary Kate D’Souza, co-founder and chief legal officer of Gentreo,
a boutique online estate planning software firm. “These three documents can
potentially save you thousands of dollars and protect you and your loved ones.”
Today’s 40-year-olds, after all, have seen firsthand just
how important estate planning can be.
“The pandemic has shown us that life can change in an
instant and it’s critical to be prepared,” said D’Souza.
Similarly, it might be time to steel yourself for the
realities that come with having parents in their senior years.
“Seek out professional guidance through a fiduciary and
someone with no conflicts of interest for help with managing an estate and
inheritance,” said Senour. “It’s been estimated that millennials will be
inheriting anywhere from $30 trillion to $68 trillion over the next decade or
more from the previous generation, so seeking help to navigate the additional
complexities of a massive windfall will be vital.”
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