Day #322: Life Begins at 46?

In my aging policy class we recently discussed an article from the Economist magazine that argued that older people are happier.  In fact, it even went so far as to suggest that our happiness level takes a ‘U-Bend’ if plotted over time.  Interestingly, they noted that happiness reaches its lowest point at the age of 46 and then climbs to incredible heights.  I found this interesting because just last night Bernard Jr. just became the oldest boxer to win a title after winning the WBC middleweight title at the ripe old age of — wait for it — 46!  What a coincidence!!

My first reaction to all of this was one of disappointment since I have a few years yet before I reach the age of 46.  Does that mean that life will stink for me at an increasing level of stinkiness until I reach that lowest point of the U-Bend at 46?  Does this mean that everyone aged 46 and older is happier than I am?  How are we to interpret studies like this?  I think the idea was that in our thirties and early forties we are faced with some of the biggest challenges.  We are raising children and navigating career challenges.  From a financial standpoint, we are trying to earn and save as much money as possible so that our families can be comfortable — now and in the future.  In our mid to late forties, most of us start to figure things out.  We are more self assured, our children are more self-sufficient and hopefully we have developed a decent financial foundation.

I think the useful takeaway in all of this is that when you are stuck in the trenches slugging through what seems like insurmountable problems, it is comforting to know that for most people, things do get better over time.  Often, we have this image of older people as sad, lonely shadows of their former selves.  This is not reality for most people.  In reality, older people tend to have fewer worries and are not consumed by their problems.  I guess most people become more self-confident and less anxious as they get older.  That confidence isn’t magically bestowed upon us.  I think we just grow into it.  I know that is what I’m working toward.  As a fight fan, I keep looking at this picture of Bernard thinking “now that’s not a guy who lacks self-confidence“.  In this picture, I see passion and confidence and the will to succeed despite the odds.  Those are ingredients for success and appear to have worked well for Mr. Hopkins last night.

Again, the key to keep in mind here is that no one is suggesting that the minute you turn 46, life magically becomes perfect.  It takes work.  Maybe we just figure out where to put the effort by then and we begin to reap the rewards.  Going back to finance, these ideas dovetail nicely with the notion of lifecycle investing.  The four main stages are:

  1. Accumulation:  for young people who can afford to take on more risk due to their extended investment horizon;
  2. Consolidation:  for older people who have not yet reached retirement age who focus more on making sure that their retirement (and other major expenditures — like college tuition for children) needs are met;
  3. Spending:  for retirees who have begun to live off of their retirement savings; and
  4. Gifting:  for people approaching their life expectancy who wish to give away their remaining assets.

At 46, most folks should be squarely in the consolidation stage.  They should have a decent financial plan and need only to follow it carefully in order to realize their financial goals.  Having such a plan in place gives tremendous peace of mind and can easily lead to that increased happiness that the Economist suggested awaits us.  I’ve always been a big fan of this approach to investing and encourage folks to think about their asset allocation choices in this manner.  Apparently I’m not the only one who is keen on this approach.  Many of the big mutual fund families have rolled out life cycle funds for investors.  The cool thing is that the fund managers do all of the rebalancing work for you as you move from stage to stage as you age.  You simply pick the fund matched to your expected retirement date and the fund managers do the rest.  I don’t like to give specific investment advice, so I won’t throw out any names, but if you’re interested, go to some of the big fund sites (like Fidelity and Vanguard) and see what they have to offer.

So again, if you’re 46, research says that good things are on the horizon for you.  I, on the other hand, have some more time in the trenches but I’m laying the foundation for greatness and I encourage you to join me!

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