Midlife Stress: Understanding the U-Curve of Happiness and How to Feel (and Do) Better

It’s easy to assume that financial confidence increases over time. You make more money as you get older after all. However, the opposite appears to be true. Recent research suggests that financial stress – not confidence – increases as we age, peaks in mid life, and then gets better through our 60s.

This financial stress may be the root of the midlife crisis.

The U Curve of Financial Confidence and Happiness

If you were to illustrate financial confidence across generations, you would see that the results are in the form of a U-curve. Confidence and happiness are highest at the earliest and latest stages of life and lowest in the middle. In fact, financial confidence bottoms out in your 40s and 50s. 

Feeling bad in your 40s and 50s does not immediately make a lot of sense.  Most people have families, are making money, own a home, etc…  However, it may be those very obligations that cause stress.

Research has found that confidence in your own financial situation is linked directly to the number of obligations you have at a certain points in life. The maximum number of obligations typically occur in mid life. This is the period when things like home loans, weddings, children, education, aging parents, and healthcare compete for your time and money.

Taking those expenses into consideration, it’s no wonder why workers ages 45-54 feel stretched and are among the least confident about their retirement finances.

This financial stress could easily contribute to a mid life crisis as described in an article in The Atlantic, “The Real Roots of Midlife Crisis.”

8 Ways to Find Happiness and Financial Confidence in Mid Life

1. Create a Financial Plan

Do you want to:

• Feel more confident about your financial decision making?
• Save more money?
• Make more progress toward financial goals?

Create a financial plan! Researchers have found that people who have a financial plan feel more confident and have better financial outcomes.

“When you have anxiety about your finances, you have to actually face your financial situation, look at it and have a plan. There’s a temptation of kicking the can down the road, but there are things you can do to make material improvement in your end game,” says John Shearman, a financial advisor with Sausalito, California-based IV Lions, LLC, a firm that mainly serves clients in the San Francisco Bay area.

It is the not knowing that creates stress.The Boldin Retirement Planner makes it easy to build your own plan. Get organized. See where you stand. Find ways to do better with your time, savings, taxes, income, insurance, and more.

2. Figure Out How Much Savings You Will Need

In midlife, retirement looms on the horizon. You are probably excited about it, but are also feeling anxious about whether or not the amount you’ve saved is adequate.

Your worries are perfectly normal, but there are ways to quash those anxieties and help put one’s mind at ease.

Some people say that you should have about 1.4 times your annual salary set aside by the time you’re 35, 2.4 times when you’re 40, and 3.7 times by age 45 and  5.2 times when you reach 50.However, those are just guidelines that may or may not be applicable to you. The only way to confidently know how much you really need to be saving is by creating a detailed retirement plan.

3. Prioritize Savings Over Other Obligations

You are not going to get rid of the stress by just worrying. You need to prioritize.

And most financial planners suggest that you choose retirement savings as your priority.

• There are loans for college, none for retirement.
• Weddings and vacations last only a day or a few weeks.  Retirement is often 30 YEARS or more.
• Paying down debt is important.  But not as important as accumulating retirement assets.

“You’re on a race to the finish line to retirement,” Shearman says. “You need to be flat out saving as much as you possibly can by the time you hit age 50.”

4. Bump Up Your Savings When the Kids Leave Home or You Retire a Debt

Your financial obligations are at a maximum at this point in your life, but that is good news for your future. You will soon be relieved of financial pressure. Just think about the improved cash flow as your kids become financially independent and debts get paid off.

However, instead of boosting your lifestyle when you retire, boost your savings rate.

5. Choose to Thrive in Midlife

Beginnings are exciting. Endings are the goal. The middle? No one really waxes poetic about middles.

Middles are where all the work happens. They are also where life really happens. So, it is especially important to choose to thrive and make the most of this time.

6. Make Friends with Your Future Self

Research suggests that our brains naturally process our future selves as strangers. And, let’s face it — you are unlikely to save for retirement expenses or care for the body of a stranger. It turns out that by visualizing yourself in the future and “getting to know” that person, you are more likely to take steps now to take care of this future version of yourself.

7. Try a Sabbatical or Mini-Retirement

Think again if you believe retirement at age 50 is impossible.

Sure, maybe you can not quit working forever, but maybe you can “try on” retirement and see what it feels like.

More and more people are doing a mini-retirement by taking a month or year-long sabbatical from work. Some temporary retirees opt to spend time with family, others pursue a hobby and still others explore alternative work arrangements, a second career.

8. Avoid the Affair and Pricey Sports Cars

If you are already feeling financially stressed, the tropes of a midlife crisis – sports cars and a divorce – will definitely make matters worse. Focus your energy on yourself first and start building your Boldin plan.