Job loss, divorce, death of a spouse, serious illness or disability — it’s hard to imagine experiencing a major life crisis. Unfortunately, most of us will at some point in our lives.
A recent survey by AARP Financial Inc. found that nearly 60 percent of Americans ages 40 to 79 already have experienced an event that had a significant impact on their finances.
When it comes to saving and investing, most of us focus on happy life events like buying a house or saving for college or retirement. But the reality is that our most fateful financial decisions are usually triggered by a sudden life crisis.
“Given the unpredictable and unfortunate nature of a life crisis, these are times when we may be distracted, overwrought or vulnerable,” says Richard “Mac” Hisey, president of AARP Financial. “As a result, many of us make poor decisions or take no action at all — possibly putting our financial security at risk.”
Many of us feel anxious when dealing with money matters. But life crises can trigger additional emotional factors such as denial, anger or regret that can make financial decisions even more difficult. Hisey notes, “life crises are the perfect storms of personal finance, where the need for important, and often urgent, financial decisions meets an emotional hurricane.”
The issue is particularly acute for women, who generally outlive men, and, as a result, experience more life crises and deal with the consequences longer. In addition, women are the caregivers in most families. That means they are frequently dealing with the human and logistical consequences of a life crisis, leaving little time and energy for the financial considerations.
Complicating matters is that instead of seeking out a professional financial adviser, the vast majority of us turn to family and friends for financial advice in times of life crisis. Family and friends are well-intentioned and may supply great emotional support, but they are not necessarily financially well-informed. Maybe that’s why 45 percent of people who had experienced a life crisis said it was hard to trust the financial guidance they were receiving.
On the other hand, individuals surveyed who relied on professional financial advice felt very well served. Sixty-six percent said they had a “very positive” experience with their professional financial adviser while another 24 percent said they had a “somewhat positive” experience.
“It’s clear that timely, expert professional advice often can make all the difference,” Hisey says.
If you don’t have a financial adviser or if you need a second opinion, AARP Financial offers experienced, non-commissioned and specially trained financial advisers on call to provide one-on-one guidance at (888) 602-PLAN. AARP Financial also has an online resource, Life Crisis Action Steps (www.aarpfinancial.com/lifecrises), that provides easy steps you can take before, during and in the aftermath of a life crisis to give you more confidence and a greater sense of control.
“We know it’s hard enough to contemplate some of these scenarios, let alone plan for them. But you don’t have to go it alone,” Hisey adds. “There are plenty of resources to help you better understand and manage the financial and emotional implications of a life crisis.”
Courtesy of ARAcontent