Something interesting happens on one's 50th birthday, a change of mindset that impacts personal financial and life transitions planning. Age 50 is a wakeup call!

A little over 3.7 million people were born in the U.S. in 1965. Some died between then and now, but add immigration and we could see roughly 4 million people celebrate their 50th birthday this year. Something interesting happens on one’s 50th birthday, a change of mindset that impacts personal financial and life transitions planning. Age 50 is a wakeup call!

You realize that no longer are you 40-something. If you live to be 100, at 50 you clearly are “middle aged.” That hits home when a solicitation to join AARP arrives. You figure half of your life is behind you. What to do with the second half?

Retirement is not something you focused on up to now except for signing up for a 401(K) at work and perhaps contributions to an IRA. Retirement has been a faraway “someday” concept, something your parents worried about, but not you, not yet.

You have thought about retirement at age 65, or at least achieving financial independence by then, since 65 stuck in your mind as a normal retirement date. A 4/26/13 U.S. News Money report by Emily Brandon, “What Gen X Doesn’t Know About Social Security,” indicated that Gen Xers born between 1960 and 1976 plan to collect Social Security benefits at an average age of 65. Reality is that full retirement benefits are not available until age 67. Those signing up prior to “full retirement age” (FRA) will get permanently lower payments for the rest of their lives.

Since we know that people in general are living longer, what about longevity? A 3/16/12 report on healthcentral.com by Dorian Martin, “Boomers, GenXers Have Different Views of Exercise,” noted that Boomers are into exercise. GenX, not so much! The fitness industry’s main customers are 55 and older. Sports participation is higher among aging Boomers than it is with those born between 1962 and 1972. Generation X has shown decreasing participation in many sports and exercise activities. Interest in team sports, other than softball and touch football, has abated, along with participation in individual fitness regimens. While Boomers like organized activities, GenX tends to select activities that are done when convenient.

Those turning 50 may have parents in their 70s and 80s. They are watching mom and dad and their worries about healthcare and long term care expenses. Part of the wakeup call may be the need to pay attention to one’s health so as to have a long, active, and independent retirement, whatever that is. “So,” thinks our birthday person, “if I get serious about health and living longer, and maybe a 30 year retirement, how am I going to finance that? How will I make the money last?”

At 50, many couples still have kids in the nest, with educations to be financed, teaching them to drive with attendant expenses , and, perhaps, weddings at some point. The 17 year journey from age 50 to age 67 could be some of your highest cost years. And yes, you want to have some fun...family trips, experiences. Think about the ages of your children today. How old will they be 17 years from now, and what will it take in family resources to get them there? “During that time frame, am I (we) going to have to help mom and dad?” How old will they be in 17 years? How might parental obligations weigh on your retirement accumulation plans? How much juice is in your orange?

Insurance actuaries know that in the 50s the mortality rate for males jumps significantly. There are more widows in their 50s than you realize. Guys, have you reviewed your insurance estate lately? Various theories suggest that you do not want to tap your retirement nest egg by more than 4%-5% annually or you increase the risk of running out of money before you die. It takes $1 million in life insurance face amount to produce $3,333 per month pre-tax at 4%; $4,167 per month at 5%. Wives, if you lost your breadwinner husband, do you have enough coverage to assure family security? Husbands, same question if you lost your breadwinner wife? For single parents the question is even more important! Trust planning is key when minors are involved.

That you need a comprehensive financial plan to get you from here to there is part of the wakeup call. You must answer the “what if?” questions to deal with unforeseen circumstances—death, disability, career reverse. You need a forward-thinking investment plan to accumulate assets to power goals, objectives, responsibilities, and dreams.

Happy birthday! Welcome to the Second Half, when you finally get to be all you can be...the best version of yourself!

Lewis Walker is President of Walker Capital Management, LLC. Certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with Walker Capital Management, LLC. lewisw@theinvestmentcoach.com