For 48-year-old Rowan Childs from Wisconsin, a recent divorce has turned her financial life upside down.
“At first I was very nervous and worried about it a lot, but ultimately I feel so much stronger now,” Childs told CBS News.
Like others in their 40s, Childs, who runs her own literacy nonprofit, was already concerned about balancing personal debt and setting aside college tuition for her two children. She then joined the roughly half of married women around her age in the U.S. who have experienced divorce, a life-changing event that can jeopardize the situation. retirement planning.
“That completely changed my original vision, you know?” Childs said. “…Where will I be when I’m sixty, seventy or eighty?”
Childs said retirement wasn’t necessarily something she thought about when she first got married.
“It was too far away, I guess,” Childs said. “But watching what my parents were doing was definitely something I observed.”
Teresa Ghilarducci, a labor economist at the New School for Social Research in New York City, has a sobering perspective.
“People in their 40s and 50s will do worse than their parents and grandparents,” Ghilarducci said.
Ghilarducci explains that those two previous generations could at least rely 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 are now confronted financing challenges, something Childs reflected on as she faced a series of difficult financial decisions. The most expensive was to buy her ex-husband’s share of their Wisconsin home by borrowing more than $100,000 from her 401(k).
It was a decision driven in part by a desire to keep her daughter in the same school district.
“For me, it didn’t make sense to sell the house and then buy a house in the same school district, probably for even more,” 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 repaid in full or you may have to pay taxes and penalties. And in your 40s, paying for your child’s college education must take a back seat to protecting your own savings. That may come across as tough love, but otherwise you may be dependent on your children later.
“I jokingly told my kids I could move in with them,” Childs said. “…My son said, ‘Maybe you can live close by.'”
In your forties, the key is to take deep breaths, no matter the challenges.
“Relax,” Ghilarducci said. “Retirement planning is best done during the day, not in the middle of the night. And when you wake up, take action. Worrying is not action.”
Now that she has enough time to get back on her feet, Childs says she finally doesn’t have to worry anymore.
“Maybe working longer is on the table,” Childs said. She is also considering the possibility of working part-time later in life.
“I think outside the box,” she adds. “…I don’t necessarily know exactly how to get there, but if I see something, or that’s what I want, I’ll often find a way.”
Jill Schlesinger
