Meet Calvin. That’s not his real name, of course, but his story could fit scores of people. After eighteen years of solid performance at a major corporation, Calvin, a mid-level manager, senses there’s more to life than putting in time for the company and drawing a paycheck in return. For a while now, he has had the itch to get involved in nonprofit work with disadvantaged kids. He knows it will cost him—in income and probably in benefits—to make the move, but his gut is telling him if he doesn’t do it soon, the window of opportunity will close for good.
Or what about Janelle (also not her real name)? Having lost her husband of twelve years to a tragic work accident two years ago, Janelle is starting to think that it’s time to return to the teaching career she left when her first child was born. The kids are in the second and fourth grades, respectively, and though she has sufficient resources that a regular paycheck isn’t required for the near future, Janelle believes that re-establishing a professional life would be beneficial for her self-image—and likely help her be a better mom, too.
People make mid-life career changes for reasons like these, and dozens more. For some, the change is instigated by a lifelong dream that seems to be slipping out of reach. For others, the grind of working at a job that, while remunerative, is out of alignment with personal values and priorities creates an internal crisis requiring a radical readjustment. And sometimes, an opportunity comes along that is simply too good to pass up. But one thing that almost all such mid-life career changes have in common is that they involve personal and financial uncertainty—and that almost always means stress.
What can you do to prepare for making a mid-life career shift? While it’s probably not possible to completely eliminate all the unknowns and the stress that goes with them, there are some things you can do to take control in certain areas. And of course, the more you can know and plan ahead, the more secure you’ll feel when you take those first steps through the doorway into your new phase of life.
Getting the Cards on the Table
The first step—and maybe the most important one—is getting clarity around why you want to make a change in the first place. And if you have a life partner or children at home, you’ll need to make sure they have clarity, as well. For starters, it might help to understand that if you’re considering a career change, you’re far from alone: according to the US Bureau of Labor Statistics, Baby Boomers have held an average of almost 12 different jobs between the ages of 18 and 40. And Millennials tend to change jobs even more often. So, once you’ve decided that you need to make a move, spend some time figuring out why. Is it the culture of your present employment? Have you reached a position—perhaps by promotion—that doesn’t allow you to do the things you originally wanted to do when you started? A 2018 study by LinkedIn reported that 86% of Millennials would consider changing jobs, even for lower pay, if the new employer was better aligned with their personal values and mission. And let’s face it: toiling away in a place where you don’t believe you fit can take a real toll on your mental and emotional health.
If you have a family, you need to have these conversations with them. You may even learn that they can see the cost of your dissatisfaction and would rather have you doing something that gives you more fulfillment—even if it comes with a smaller paycheck. In any case, the people who are most important to you need to know what you’re thinking and why you’re thinking it. And everyone also needs to understand, accept, and plan for any lifestyle changes that might be necessitated by your decision.
Think through the Finances
It is much better to have the time to think ahead and make financial plans around your move. Of course, if your change is being forced on you due to a layoff or downsizing, that may be harder to accomplish. But in a best-case scenario, you’ll be looking ahead to your targeted career, analyzing income potential and comparing it to where you are right now. In many cases, you may be looking at a drop in income; for some career changes, there might even be a period of additional education or re-training required, during which you can only work part-time, if at all. Do you have sufficient savings built up to carry you through the lean times? If you don’t have three to six months’ income in an emergency fund, this is the time to start building up that balance. If you participate in your present employer’s 401(k) or other retirement plan, what are your options? Will you roll it over to a new plan or a rollover IRA? Does your plan permit hardship withdrawals, and if so, do you qualify? Are there expenses you can cut—gym memberships, premium cable TV channels, your daily latté—that will narrow the gap between your monthly outgo and income?
If you can clearly tell that your job change will mean a reduction in income, try living on that smaller income for three to six months as a “trial run” for your new lifestyle. You could even take the difference between your current income and your “new” wages and put it in savings to build up your emergency fund. The point is, the more you can anticipate the differences in your circumstances and resources before and after you make your move, the more prepared and confident you’ll be when the time comes.
At The Planning Center, we understand that not all the questions that most need answers are financial in nature. That’s why our fiduciary guidance takes into account all the factors important to our clients: their goals, dreams, priorities, and yes, their financial resources. Only by assembling a complete picture can we then provide advice and direction that puts the client’s best interests ahead of everything else. To learn more, visit our website to read our recent article, “Are You Building Wealth, or Just Making Money?”
