This article describes a saving-based approach to career change after 50 (and at 30 and 40). It is a follow-up to the article titled Six Unconventional Mid-Life Career Change Tips.
I will briefly describe the ideas set forth in the earlier article here but I urge you to read the earlier article as well.
We make a mistake when we place career issues in one box and saving issues in another box. There is extensive overlap between the two areas of concern. If you didn’t have to be concerned about income issues, you could jump from career to career until you found one to your liking. The reason why you feel stuck is that the income you earn from your current career is greater than the income you would earn in a new career more to your liking. The problem you are trying to solve is at its core a money problem.
The purpose of this article is to explain how the money dynamics of the career change question differ at age 30, at age 40 and after age 50.
Career Change at 30
Career change is in one way very easy at age 30 and in one way very hard at age 30. It’s easy because you have probably not taken on large financial responsibilities at this age. You may not yet own a house. You may not yet have children. If you do have children, you are not going to need to worry about college expenses for many years. Your retirement is far off in the future.
I don’t mean to suggest that career change at age 30 does not seem like a difficult business to those trying to pull it off. It does. My point is that, if you talk to those trying to pull off a successful career change at 40 or after 50, they will tell you that this life transition only gets harder as you age. The takeaway lesson is — Do not silence that voice in your head telling you to take action on career change. If you are thinking about how to make a career change, there is a reason. Don’t settle. If you do, the odds are that you will 10 or 20 years from today be looking at a far more difficult career change task — changing careers at 40 or after 50.
Most of us make poor career choices when we finish school. Why? We don’t know much about what it really takes to succeed at the various careers! We take a guess as to what might work out for us. Unless we are very lucky, that guess turns out to be at least a bit off the mark. But it’s easy to get locked in to a job. Once you have made friends and contacts and attained a little bit of success, the idea of starting over becomes intimidating. I am here to tell you that the feeling of dissatisfaction that you feel today is going to get worse. Put some effort into this and save yourself greater pain down the line.
But do not feel a new to make sudden jumps. Save enough money to make a responsible jump — it won’t take much at your age. And don’t repeat the mistake that got you into this mess: Learn everything you can before moving to the new career so that you can be sure that it is the perfect choice for you. Try to enjoy the career change process. It can be fun. Learning what work is best for you is learning what makes you tick. You’re a pretty darn interesting subject of study, no?
Career Change at 40
Career change at 40 is tougher for several reasons. One reason is that you are probably making a lot more money than you were at 30. We do not receive raises evenly over the course of our working lives. The big raises come after we have learned enough to possess hard-to-replace skills (this usually does not happen until the mid-30s) and before we reach a plateau after which it becomes difficult to enhance our skill sets too dramatically (most of us plateau by age 50). If you have been earning big raises for five or ten years, it is going to be hard to give those up to pursue a new career.
You will not need to give them all up, of course. Many of the skills you have developed will be of considerable value in your new career. But it is not reasonable to expect that on the first day in a new field you will offer as much value as you do in the old field today. It’s possible that you will get paid as much. There can be a negative side to that. The more you are paid, the more is expected of you. Being paid more than you are worth can be a highly stressful experience. If you transition without taking a pay cut, there is a chance that at least for a time you will be getting paid more than your market value. Don’t turn the money down. But do take this reality into consideration when planning the transition. There’s going to be emotional turmoil in your first year in your new career.
A case can be made for sticking with a less-than-ideal career at age 40. If you have responsibilities to a spouse or to young children, those need to come first. It’s hard not to pursue a dream of greater life fulfillment. But the balanced way to look at this is that you had chances to pursue your dream job in earlier years. It’s not too late to pursue your dream job at age 40. But it’s getting there. I made a risky career change at age 43. I spent years sweating that one out before taking irreversible steps.
You still have many years of work ahead of you at age 40. But it may be that you can find other means of expressing your creative side. It’s easier to stay put in the safe but boring job. Perhaps you can do exciting things with your nights and weekends. Talk to friends who have lived through a mid-life career change before handing in a resignation. They will tell you how hard it is to pull one off. If you quake at the thought of having to be a beginner all over again (and perhaps of being paid beginner’s wages to boot!), save yourself the heartache. There are lots of fun and smart and brave and good people doing work that is not perfect for them. We don’t all get to do what we love. Those who tell you that you simply must do what you love are telling a lie.
The best sign that a career change at 40 is the right move for you is a feeling that you really cannot bear the current job one more day. If you hate your job, it’s probably because there is something inside you that is feeling a pull (perhaps one you are afraid to acknowledge) to do something else. Yes, those unbearable feelings do have a positive side to them! You can live with a less-than-perfect job even for another 30 years if it comes to that. You cannot continue with a job you despise for that length of time. If you truly hate your job, career change at 40 is for you.
But do not give in to that feeling that you must hand in your resignation today! That’s almost always a mistake.
Why did you make a bad career choice the first time around? Because you had to have a job to pay the bills and you didn’t know enough to make the best choice. That’s understandable. It’s not understandable to make the same mistake twice! So long as you stay at the current job, you have an income coming in that finances your efforts to learn for sure what career is best for you. Take advantage of that. Do not rush the career change process!
Create a financial cushion. Few of us are saving all we can. Increasing your saving rate helps you make a successful career transition in two ways: (1) it reduces the amount you must earn at the new job (because you have learned to live on less); and (2) it increases the stash of money you have available to you to help pay the bills in the event you need to accept earning less for a time.
The product of saving is financial freedom. A greater measure of financial freedom is what you need to make the move from Point A (the not-so-great spot in which you reside today) to Point B (the wonderful spot to which you are headed). Money makes it happen, man! I am now age 54 (this article was posted in June 2011) and I am still living the dream I pursued when I made a successful career change at 43. I have had lots of hard hits delivered to me in those 11 years. I’m still standing today because of the financial cushion I built before taking the leap.
I cannot overestimate how big a difference this can make. If you start a business, you are going to be scared that there is not enough money coming in. If you accept a pay cut, you are going to be frustrated that you have taken a step back financially. If you are under pressure at the job, you are going to be worried about what would happen if you were to get fired from the new position. Money in the bank eases all these concerns.
Only in unusual circumstances would I urge someone who has not first saved a significant amount of money to make a career change at 40 that required acceptance of a pay cut. If you hate your job, you can turn it around. . But you want the odds on your side. Every dollar you put away puts the odds more on your side. Don’t rush this thing. It is better to take five years planning a career change that succeeds than five months planning a career change that fails.
Career Change After 50
Hitting 50 is not turning old. It can’t be — I’m 54!
But please don’t fool yourself into thinking that changing careers at age 50 is as easy as changing careers at age 30 or at age 40. No. Employers don’t like to insure those of us over 50. It’s harder to learn new skills after age 50. When you go past the 50 mark, you start to notice how much energy those in their 20s and 30s and 40s possess. Retirement is no longer a far-off concern at age 50.
Have I completely depressed you yet?
That’s not my intent. I believe that my best years are ahead of me. I know a whole big bunch more about how the world works today than I did at 30 or 40. There are many people who only began to hit their stride at age 50 and did amazing things in their 50s, their 60s and even in some cases in their 70s.
So you should not give up on the idea of changing careers just because you have turned 50. It may be that it has taken you a number of years of living to gain a clear picture of precisely what sort of work you should be doing. If that’s so and if you can come up with a good transition plan, you should go for it. There may not be as much life in you at 50 as there was at 30. But none of us get a second chance at all this. At age 50, you have the limited choices available to those at age 50. You need to make the best of the cards you have been dealt.
You want to take full advantage of the one big edge you possess. If you are 50, you probably have more savings accumulated than you had at age 30 or at age 40. That money can be used to tilt the odds in your favor. The more money you have put aside before you hand in your resignation, the more likely you will be able to stick at the new career long enough for it to pay off. The benefit of being 30 is that you have more flexibility than you will have at 50. The benefit of being 50 is that you have a bigger financial freedom stash than you had at 30. A financial freedom stash can be translated into flexibility.
Say that you have $500,000 in accumulated assets. A reasonably smart investor can count on an average long-term return of 5 percent on his or her investments. So you are generating $25,000 per year in new capital just from your investments. Say that you are able to develop a worst-case-scenario budget in which you get by on $50,000 of annual spending. In that scenario, you only need to earn $25,000 for the first few years in your new career to cover your living expense.
You don’t want to be earning $25,000 for all of your remaining days. You want to be moving to a new career that will provide you with a pleasant retirement down the line. But in those circumstances you could get by on $25,000 of earnings for several years if you had to. That puts you in a far better position than the one you would be in if you needed to earn $50,000 in your new career right out of the gate.
The numbers I am using probably do not apply to your particular circumstances. There is no one set of numbers that I could put forward that would make sense for everyone reading the article. But the principle applies in every case. At age 30, it might be okay to just leave a job and count on your resourcefulness at finding a new one to see you through. At age 50, I think it would be a mistake to play it that way. At age 50, career change is a financial issue as much as it is a human growth issue.
There are many strategies for getting the required funds in place. You can learn about them by reading other articles at the site. The key to making them work is patience. The career-change plans that work are the career change plans that are well thought out. It’s harder to pull off a successful career change at age 50 than it is at 30 or 40. So you need to be spending even more time putting the plan together and accumulating the assets needed to make a serious go of it.
Perhaps you feel that you need to rush things because you are older than those making career changes at younger ages. No. You are at a disadvantage. That’s not a reason for giving up your dream of doing the work you were meant to do. It is a reason for putting in the time and effort needed to do it right. You’ll thank me later if you run into unexpected obstacles that you are able to overcome because you took the time to include a serious financial component in your career-change plan.
There is no risk-free plan for career change. This entire question is a risk-management question. The problem is that many of the risks are out of your control; none of us know in advance how difficult a career change is going to be. There is one element of the project over which you have considerable influence: How much in the way of savings you have to finance the transition.
Take the time to do this right. Please don’t think that I am asking you to sacrifice your dream. I am trying to make your dream come true. That’s what saving is all about. If the dream is a strong one, one that you really were meant to pursue, you will figure out a way to save more in less time than you ever have before. Do that and a lot of the anxiety associated with handing in your resignation from the safe but boring job will dissipate.
Saving buys financial freedom. Not only when you are age 65 or older. Saving buys the financial freedom needed to make a career change plan work at age 30 or 40 or 50. You can do it! Go into it in the right spirit and you will learn that you can do things you would have thought impossible back in the days when you were trying to save for some other reason than to make your career-change dream a reality.
It is effective saving that makes your mid-live career-change plan viable. Your next stop in your plan to achieve a successful mid-life career change is not articles telling you more about the topic of career change per se. It’s articles telling you more about how to become a highly effective saver in a world in which more and more it is the highly effective savers who are best able to get what they want out of their lives.
I made a successful (so far!) mid-life career change at age 43. I know how it feels, both the exciting part of the story and the scary part of the story. You have my best wishes in this next chapter of the story of how you came over time to leave your personal mark for the good on this mixed up world of ours. Get out a pad of paper and a pencil and — Start working some of those numbers you need to work to make that too-long denied career change dream of yours come true!