Financial Planning for the Second Half of Life: An Initial Guide

Financial planning for the 2nd half of life in a planet-positive way

The second half of life – a daunting yet exhilarating prospect. It's a time when many reassess their goals, values, and, crucially, their finances. This isn't just about accumulating wealth; it's about aligning your money with your purpose, ensuring a fulfilling and resilient future.

This guide provides an introductory look at financial planning for this pivotal stage, acknowledging the unique challenges and opportunities that midlife and beyond present. It emphasises a holistic approach, integrating both your financial capital and human capital – your skills, knowledge, and overall well-being – all while keeping in mind the importance of planet-positive considerations.

Reframing Retirement: A Transition, Not an End

The old idea of retirement — stopping work entirely at a set age — is fast becoming outdated. With people living longer and staying healthier, this model often doesn’t fit modern life. For many, it’s not financially viable and can even lead to a loss of purpose or social connection. Instead, think of retirement as a transition — a time to reinvent yourself, explore new directions, and design a life that continues to be meaningful.

This shift involves:

• Reassessing your values: What truly matters to you now? Are you prioritising experiences over possessions? Do you desire more time for family, hobbies, or contributing to a cause you believe in?

• Identifying your passions: What activities bring you joy and a sense of fulfilment? Could any of these be monetised, even on a part-time basis?

• Exploring flexible work options: The gig economy, consulting roles, and part-time positions offer opportunities to stay active, engaged, and financially secure while pursuing your passions. This provides continued income, builds resilience, and adds a layer of purpose to your life.

• Downshifting: Consider reducing your expenses by downsizing your home or relocating to a more affordable area. This can free up financial resources and potentially also reduce your environmental footprint.

The Power of Purpose: Discovering Your "Why"

A sense of purpose is crucial for a fulfilling second half of life. This goes beyond financial security. It's about having a reason to get out of bed each morning, a contribution you want to make to the world. Discovering your purpose can be a transformative process:

• Reflect on your past: What experiences have brought you the most satisfaction? What skills and talents do you enjoy using?

• Identify your values: What principles are most important to you?

• Consider your legacy: What impact do you want to have on the world? How do you want to be remembered?

• Explore volunteering: Volunteering can provide a sense of purpose, social connection, and the opportunity to make a difference.

• Connect with your community: Engaging with local organisations and initiatives can foster a sense of belonging and purpose.

  
  

Finding your purpose is not a destination, but a journey of self-discovery. It guides your decisions , provides motivation, and often leads to unexpected opportunities. This is particularly relevant to your financial planning, as you can now align your resources with your values.

Holistic Financial Planning: Human Capital and Financial Capital

Traditional financial planning often focuses solely on accumulating assets and managing investments. However, a holistic approach recognises the importance of human capital – your skills, knowledge, health, and overall well-being. It considers how your financial decisions impact your quality of life and vice versa.

• Assessing your human capital: Evaluate your skills and knowledge. Are they up-to-date and relevant to the current job market? Investing in education, training, or skill development can enhance your earning potential and open up new opportunities, especially if you're considering a career change.

• Prioritising your health: Your health is your most valuable asset. Maintaining a healthy lifestyle through diet, exercise, and stress management is crucial for both your physical and financial well-being. It can help you stay fit enough to be able to earn for longer (albeit from something you enjoy doing). Healthcare costs can also be a significant expense later in life; investing in preventative care now can save you money (and suffering) later. This also applies to mental and emotional health which should not be ignored, especially in times of transition.

• Building/maintaining strong relationships: Social connections are essential for happiness and well-being. Nurture your relationships with family, friends, and community members. Strong social support can provide emotional support, practical assistance, and a sense of belonging which contributes to overall life satisfaction. They can also be important for resilience and support in times of stress.

• Traditional Financial Housekeeping: Along with the above, don’t neglect the basics. Have you located all of your pension pots from previous employments? Could you consolidate them for easier management and potentially lower fees? Are you regularly monitoring your investments and rebalancing your portfolio? Need a financial planning app to get a clear picture of whether you’re on track to meet your goals? The Planet Positive Planning HAPNAV app can help you do just that.

• Integrating financial and life goals: Your financial plan should be aligned with your life goals and values. This requires careful consideration of your income, expenses, assets, and liabilities. Get it touch if you'd like to create a personalised plan that addresses your specific needs and objectives.

Planet-Positive Considerations in Midlife Finance

Let's face it, many of us entering the second half of life are starting to think about the legacy we'll leave behind. And increasingly, that means considering the environmental impact of our financial choices. Climate change isn't just a future problem; it affects us today. We're seeing it in higher energy bills and more extreme weather events. Being eco-conscious isn't just kind; it's also about securing your future and that of your children and grandchildren. This goes beyond ethical investing and encompasses a broader range of choices.

• Sustainable Consumption: Be mindful of your consumption habits. Buy less "stuff" and rely less on material possessions. Focus on experiences instead. Think about how your purchases affect the environment. Choose products and services that are sustainable and ethically sourced.

• Ethical Investing: Align your investments with your values. Invest in companies that are committed to environmental sustainability, social responsibility, and good governance. Consider divesting from fossil fuels and supporting renewable energy initiatives.

• Energy Efficiency: Save energy by buying energy-efficient appliances. Also, add better insulation and use renewable energy sources, like solar panels. This reduces your carbon footprint and saves you money on utility bills. Green home upgrades can be seen as a tax-free investment. You earn back your costs through savings on future energy bills.

• Sustainable Transportation: Think about other ways to get around, like cycling, walking, or using public transport. If you need a car, choose a fuel-efficient or electric vehicle.

• Supporting Local Businesses: Support local businesses that are committed to sustainability. They often have a smaller environmental footprint and contribute to the local economy.

  
  

Future Volatility and The Need for Resilience

We’re living through a time of big, interconnected global challenges.  Inequality is growing. Planetary destruction is ongoing. Global tensions are increasing. Powerful new technologies are changing everything — fast. It’s no wonder things feel uncertain, both financially and socially. And the truth is, things are likely to get tougher before they get better. Building future resilience is paramount.

• Diversify Your Investments: The old saying “don’t put all your eggs in one basket” still holds as important as ever — and it's not just about investing.

• Diversify Your Future Income Too: Don't plan to rely solely on one source of income in future. Diversify your future income through a mix of work you enjoy, pension income, investments, state pension and property (or savings on rent from owning a house) too. Continuing part-time work in an area of interest can provide both financial security and a sense of purpose.

• Build an Emergency Fund: Having an emergency fund is essential to help you weather unexpected financial storms. Aim to have at least 3-6 months' worth of living expenses saved in a readily accessible cash savings account.

• Manage Debt: High levels of debt can make you vulnerable to financial shocks. Prioritise paying down high-interest debt, such as credit card debt.

• Consider Alternative Asset Classes: Let's be honest, the current capitalist system is becoming increasingly unsustainable. There is the risk that it could break by the time your retire. Explore building up some investment in alternative asset classes that may align more with the post-capitalist world that society needs to progress towards. This could include "decentralised" assets like social (or crowd-funded) investments that support genuine needs for a low-carbon society or your local community — e.g. community energy projects. Also, well-researched cryptocurrencies — although remember, many of these are high-risk investments, so due diligence is a must and start off small. Keep abreast on this evolving space, and get in touch, if you have questions and you'd like to educate yourself further.

  
  

Putting It All Together: Actionable Steps

• Assess your current financial situation: Create a budget, track your expenses, and calculate your net worth.

• Define your goals: What do you want to achieve in the second half of your life? Make these goals exciting and transformative. You only have one life to live, so aim to live it well. After defining your ideal future, break it into practical steps. You can set "SMART" goals, which are specific, measurable, achievable, relevant, and time-bound.

• Develop a financial plan: Get in touch, to see how I can help you in creating a personalised plan that aligns with your goals and values.

• Review and adjust your plan regularly: Your financial situation and goals will evolve over time. Review your plan regularly and make adjustments as needed.

• Embrace lifelong learning: Stay informed about financial trends and investment opportunities.

• Connect with a community: Join a community of like-minded individuals who are also planning for the second half of their life.

  
  

Financial planning for the second half of life is an ongoing process, not a one-time event. Midlife finance requires continuous learning, adaptation, and a willingness to embrace change. By adopting a holistic approach, integrating planet-positive considerations, and building resilience, you can create a fulfilling and financially secure future, aligned with your purpose and values.

Ready to Explore Further?

This initial guide is just a starting point. For a more in-depth exploration of how to align your finances with your values and create a planet-positive future, explore the Planet Positive GAME Plan — get in touch.

It's time to take control of your financial destiny and create a future that is both prosperous and sustainable.