How a "Mid-Life Crisis" Can Affect Your Financial Plans
Written by Preet Banerjee

Thursday, September 6th, 2018

Most of us will be familiar with the use of the phrase "mid-life crisis" to refer to reckless decisions someone might make in middle age. But let's ask a psychiatrist to weigh in.

I asked Dr. Ajmal Razmy, Service Medical Director of Trillium Health Partners' Acute Care Mental Health Program in Mississauga, Ontario, about this phenomenon.

What Does "Mid-Life Crisis" Mean to You?

"What a disturbing term! First off, what is mid-life? To define it, we would have to know when end-life is and that is something no one is privy to. Secondly, adding the term 'crisis' implies that emotional turmoil is synonymous with living into the middle of your life, which is also incorrect.

In general, the mid-life crisis refers to a theoretical transition in confidence and how we define our selves in our fourth to fifth decades of life. Funny enough, today is my 41st birthday, which should be bang-on the mid-point of my life, should I continue to diet and exercise and stay away from fried goodies and delicious pastries, assuming I don't get run over by a truck as soon as I step out of the office."

So it Sounds Like the "Crisis" Part of the Phrase is Used Fast and Loose. But what About an Increase in YOLO ("You Only Live Once") Spending?

"In practice, I have seen the mid-life crisis impact men and women equally. We might have different spending habits with men showing preference to things such as watches and cars and women electing for experiences like lovely vacations and pampering days at the spa but these are individual variances."

What About Investments?

"I've seen interesting quests to engage in the 'startup of a lifetime' with a novel business idea that people feel compelled to chase in order to solve some inner angst during a mid-life crisis. Few of these prove fruitful and most are painful lessons in decision-making."

Is It Just the Feeling of Getting Old that Causes a Mid-Life Crisis? Or Can it be Other Things?

"Various triggers exist for the mid-life crisis, including illness of self or others, divorce, empty nesting as well as the mere aging process. Depending on previous mental health history or addiction, the mid-life crisis, like other paradigm shifts in life, can adversely impact financial trajectory.

"Take for instance an individual who had been making contributions towards their life savings to retire with their spouse, only to instead be in the midst of a messy separation or divorce. I have seen life savings squandered in this process by people who start spending recklessly in addition to the cost of settling a divorce."

Is There Anything People Should be Mindful of if They Want to Avoid the Negative Effects of a Mid-Life Crisis?

"Are you behaving differently than usual? Have your friends or family noticed some unusual trends in the way you are acting or spending your time and money? Often people entangled in a mid-life crisis are oblivious to what they are going through. My advice is to ask those around you. Making financial decisions during such times can prove challenging and costly."

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