When you hit your half-century birthday you may start showing signs of what’s known as a midlife crisis. It can be triggered by any number of life events — empty nest syndrome, a divorce, or the death of a parent. These experiences may cause you to become increasingly aware of your own mortality.
As a result, there may be a tendency to start living it up before it’s too late. Unfortunately, living it up costs more money. At age 50, you should be saving as much as you can for retirement instead of launching a midlife crisis spending spree.
Using Pay Raises To Splurge Instead Of Growing Your Nest Egg
Research shows that, when most middle-aged Americans get a raise, they’re not putting any of it aside for retirement. Does this describe you? The 2024 federal pay raise for GS workers was the largest increase since the Jimmy Carter Administration in 1980. All workers received a 4.7% base pay raise before the 0.5% locality pay increase was applied for a total increase of a 5.2%. If you used most of your raise to increase your TSP contributions, well done! If you decided to use the extra cash to cover payments on a fishing boat, your midlife crisis is leading you astray.
“If you’re withdrawing from your TSP to cover these gifts you’re putting your retirement at risk.”
Falling Victim To Lifestyle Creep
It’s a common phenomenon – as you earn more you spend more. Then again, isn’t this at the heart of the American Dream? Of course it is. But it becomes an issue when expensive luxuries start to become essentials you can’t live without due to a midlife crisis. Some examples include:
- Eating out more often at more expensive restaurants.
- Booking flights for first class or premium economy seats instead of flying coach.
- Paying for lawn care and housecleaning services that you used to do yourself.
- Buying status symbols like a larger house than you need or a vacation home.
- Replacing cars more often with more expensive models.
- Impulse buying a boat, ATV or jet skis you rarely use.
Spending Retirement Funds On Your Kids & Grandkids
Footing the bill for expensive family vacations. Paying for lavish engagement parties or pricey destination weddings. Splurging on over-the-top college graduation gifts. A midlife crisis can also include over-indulging your kids and grandkids “before it’s too late.” If you’re withdrawing from your TSP to cover expensive gifts you’re putting your retirement at risk.
An FRC® trained advisor can help you create a personalized budget that enables you to save for retirement even as you enjoy the fruits of your labor.
