The Emotions of Money — Rising college costs, postponed retirements and unforeseen expenses are giving a whole new meaning to the notion of a mid-life crisis.

By Ilana Polyak
Illustration by Carl Wiens

Thrivent Financial Representative Doug Powell doesn’t like delivering bad news, but it’s his job to tell it like it is. Recently, when he met with two Foley, Alabama, clients, he had to tell them that the numbers revealed the very thing they didn’t want to hear: They would have to work until age 67.

The 50-something pair had thought they would be able to afford an early retirement, but after putting three kids through college (the youngest is now a sophomore), their finances painted a very different picture. “If their investments do better, then maybe they can retire at 65. But the way I see it now, it’s going to be 67,” Powell says.

All three of the couple’s children went to state schools, which helped them dodge an even bigger financial bullet. One year at a private university today costs an average of $21,235, according to the College Board. State schools, on the other hand, cost just $5,491 per year on average. Their oldest daughter even won a substantial scholarship, which covered the lion’s share of her college costs.

Still, the drain of college funding had stretched Powell’s clients’ assets to the point where retirement plans were impacted. This squeeze—tuition demands pushing from one side, retirement funding demands from the other—is a dilemma Thrivent Financial representatives are seeing more often among those in their 50s and early 60s.

The good news is there is a solution, and it starts with savvy planning with a professional and some values-based decision-making. In the case of Powell’s clients, Powell’s recommendations included working longer, thereby extending the number of years to accumulate assets, and moving to a more aggressive asset allocation model.

Feeling the Squeeze You certainly don’t need a Ph.D. to know the value of a college degree. The College Board recently found that college grads earn an average of 75 percent more, over their lifetimes, than someone who only has a high school diploma. But this staple of the middle class is an increasingly bigger expense for many families. “There’s just not enough money to do everything,” says Greg Roemer, a Thrivent Financial consultant in Washington, D.C.

People who are preparing for retirement can start feeling as if their finances are being spread more thinly than at any other point in their lives. Not only are they shelling out more money for college, which has been rising at a 6 percent clip—about twice the rate of inflation—but they’re also looking around the corner to what they hope will be their golden years. Or “golden decades” might be a more accurate term. According to the National Center for Health Statistics and U.S. Census Bureau, the percentage of Americans who can expect to live to age 90 is increasing sharply.

Quite simply, many 40- and 50-year-olds fear they might outlive their money. “At this point it’s going out faster than it’s coming in,” Powell says about people paying for college but also trying to save for their own retirement. “If they’re not meeting their retirement goals, that makes them nervous.” It’s a potential “perfect financial storm” that only savvy financial planning can help offset.

Tough Choices
With competing needs and multiple priorities, smart financial planning at this stage in life can often boil down to making some tough, informed choices about what you will fund and what you won’t. Parents who haven’t been saving for their children’s higher education face a particularly difficult decision.

“If the conflict is between retirement and college funding, most financial professionals would say you should prioritize retirement,” says Mary Quist-Newins, a Thrivent Financial senior financial consultant in Rockville, Maryland.

Quist-Newins points out that children can find sources of college money other than the Bank of Mom and Dad. Student loans, scholarships and work-study are all viable options. Working with a Thrivent Financial planner can unearth even more dollars for school. In total, there is some $129 billion available in financial aid, according to the College Board.

But there are no such programs for retirees. Once you stop working, you must fund your lifestyle through your own savings, along with Social Security and any pensions you might have.

There is more than just dollars behind Quist-Newins’s advice—there’s also the aspect of passing along financial values. “I think it can be beneficial for children to have some degree of responsibility for their education and have ownership of it,” she says.

Some parents may feel that they are shirking their duties if they don’t fully fund their children’s schooling. Others may feel as if they aren’t measuring up in the eyes of their friends and family, especially if their own parents paid for their higher education. Whatever your approach, parents should be candid as early as possible about how much they will be contributing to higher education costs, Quist-Newins advises. Doing so, she says, can mitigate some awkwardness later on. “You have to be very clear with your children, so they can share in the decision-making,” she says.

The New Retirement—Working Longer
Lengthy retirements and tuition costs aren’t the only things keeping soon-to-retire people up at night. As their children grow up and leave home, big-budget life events have a way of popping up. Whether it’s helping to fund your son’s wedding, taking that 25th anniversary luxury cruise you’ve always dreamed of or helping your daughter with the down payment on her first home, your savings can be vulnerable to some rather big—and in some cases, unforeseen—expenses.

That might be one of the reasons why more people are deciding to work longer than they had originally planned. According to a recent AARP survey, 69 percent of 45- to 74-year-olds interviewed planned to continue working beyond the traditional age of retirement.

Becky Lester, a Thrivent Financial consultant in Ormond Beach, Florida, has a middle-age client who recently decided to shift career focus.

“My client loved being a doctor so much but didn’t want the stress any more,” Lester says. Instead, the physician moved into another speciality, one with a focus on assisting patients in the latter stages of life. Without changing professions and without significant financial sacrifice, Lester’s client was able to reduce the toll work was taking.

For Lester’s client, a love of the job is motivation enough. Likewise, for many reitrees, it’s not about the money. The same AARP survey showed that while 19 percent of workers said they would work at part-time jobs for income, more than a third of the total sample said they would work part-time for pure enjoyment.

In either case, while the proverbial golden wristwatch can wait—professional financial help never should.

Ilana Polyak is a New York City–based writer whose work has appeared in The New York Times and Money magazine.

Tough Talk — 4 helpful tips for discussing money with family members.

Money is as central to our day-to-day existence as water and electricity, yet many of us avoid financial discussions with family members like the plague. It doesn’t have to be that way, says Scott Wisgerhof, manager of core needs and retirement planning services with Thrivent Financial for Lutherans. In his 10 years working with Thrivent Financial members and representatives, Wisgerhof has seen how the thorniest of family financial topics can be discussed openly and respectfully with enormous benefit to everyone involved. Here are a few of his suggestions.

1. Practice makes perfect. Money should be talked about regularly—not saved for formal discussions or confrontations. Take the fear factor out of your family’s finances by “talking about your monthly financial statements like you talk about the cost of your grocery list,” Wisgerhof suggests. It doesn’t mean the children have to know every detail of your financial picture. “But when couples and families are well versed in communicating openly about the small financial stuff, the bigger things are much easier to tackle.” The added bonus? Your children will bring this same open, healthy approach to money into their own homes someday.

2. Value your values. It’s never too late to have a positive influence on your children’s views regarding saving, sharing or spending. “Just because they’re off at college or beyond doesn’t mean the chance to teach them your financial values has passed,” says Wisgerhof. “Children never stop watching their parents. So let them see you writing a check to a church or charity, or buying a used car, or having a healthy discussion about how to best save for that anniversary trip with your spouse.”

3. Don’t lecture. Whether your children are collegians or young professionals, avoid the temptation to start conversations with, “You don’t know how lucky you are…” Rather, watch for opportunities to talk with them about the financial dilemmas they are facing, and empathize that you were there once, too.

4. Involve a professional. When facing big money issues—higher education bills, conflicting opinions on investing, a job loss, retirement plans—bring in someone who can objectively guide the discussion and help you make smart choices. “A Thrivent Financial representative is just a phone call away,” Wisgerhof says. “A lot of emotional upheaval can be avoided when families involve an objective, informed, experienced third party.” 

— Heidi Pearson