Pete the Planner: Think your finances are tough now? Just wait

Reminiscing with friends last weekend led me to a strange place. I found myself trying to ascertain whether my financial life now is  easier or harder than it was 10 years ago, and would it be easier or harder 10 years from now? It was eye-opening. My big takeaway was surprising: My financial life will be incredibly difficult at age 49, and it will remain difficult until I’m 56.

People tend to think their financial lives get easier over time, not harder. I know I’m saving aggressively, refusing to take on unnecessary financial obligations and dodging lifestyle creep, yet the writing is on the wall. My early 50s are going to be hard. I’ll have two teens in the throes of postsecondary education; I will have passed the halfway point of my career; and the pressure to achieve income independence will be palpable. And unlike my 20s, 30s and 40s, any “I’ll do it later” excuse will be undeniably absurd.

Sit back and think about what the hardest decade of your life was or will be. What 10-year period was or will be marked with overwhelming expenses, lesser-of-two-evils decisions and excruciatingly high stakes? Better yet, let’s put pen to paper so you may see what’s going on.

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Grab a piece of paper. Draw a giant “L”  to make a line graph. Along the bottom (x axis), list your age in increments of five. Start at 20 and end at 100. Feel free to mark major events in your life on the x-axis (e.g., birth of a child, home purchase, child in college, retirement, etc.).

Next, number the y-axis one through 10, with the one at the bottom (representing easy) and the 10 at the top (representing hard).

Draw a line representing the difficulty of your financial life over time, taking into account the past, your present reality and your projection of the future.

Draw it now. I’m waiting. Seriously, do it. The rest of the column depends on it.

What do you notice? Unless you’re a delusional robot, your 40s and 50s were or will be much harder than you originally thought.

Every decade is peppered with housing and transportation decisions, but beyond those common threads, your decades are different because of family dynamics, increasing income and expenses and the nearing of your career’s denouement.

Your 20s may have been tainted with student loan debt, the establishment of your career and the creation of your financial independence, but all things considered, your 20s were tolerable.

Your 30s represent far and away the easiest decade of your financial life. Your income begins to grow and you’ve learned from the relatively smallish mistakes of your 20s. Lenders are more willing to extend you credit, and you’re enjoying the love/hate relationship with discretionary income.

I believe the most difficult aspects of your 30s revolve around lifestyle creep and the acquisition of stuff. Lifestyle creep describes the practice of expanding your lifestyle as your income grows. It reeks of missed savings opportunities and increased dependency on increased income.

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Your 40s are where your financial life starts to get interesting. If you had your first child by 26  (the approximate average age of an American woman’s first pregnancy), then your 40s are filled with all the expenses that come along with having a teen. If you haven’t learned from your spending mistakes, your increased level of discretionary income becomes an enablement tool, not the commonly perceived fruits of your labor. That’s what’s so terrifying about your 40s and 50s — the mistakes are huge.

When I chat with folks in this age group, they’re always surprised and relieved to hear so many others their age are struggling. The assumption that financial stress subsides as we age is a false one.

The anguish of your 40s doesn’t end at 50. You’re much closer to the end of your career than the beginning. Time is ticking, and your expenses may still be growing. It’s possible you still have children in college, and your parents' potential financial challenges may start to become your problem. Whatever happened to gliding into retirement gracefully?

Your 60s and beyond are only relatively easy if you sacrificed for the future, from the beginning. If you didn’t, your line continues to climb again. And if you didn’t do a great job of creating independent adults, your grown children now add to the magnitude of your line.

Knowing what you know now, draw your line again. Does it look the same?

No one tells you how hard your life will get as you progress toward retirement. You can mitigate risks by viewing each financial decision on a wider spectrum. Your decisions don’t just affect your current reality and your retirement, they affect all the years sprinkled in between.

Good luck, future you.

Peter Dunn is an author, speaker and radio host. Have a question about money for Pete the Planner? Email him atAskPete@petetheplanner.com