Plan for a change of direction
Susan Edmunds seeks expert advice on how to change jobs after age 50 without ruining your financial future.
Career and job changes are two of the main reasons that even the best-laid financial plans go awry in later life. If you’re made redundant, or forced out of work by illness, it can be hard to recover.
But what if you are in the second half of your career and decide you have had enough of your current line of work? Experts say it is possible to make a move without it proving financially ruinous.
Here are five ways to make it easier on your bank balance.
Transferable skills
To avoid starting a new role at the very bottom of the salary ladder, consider what you can offer from your past experience.
Frog Recruitment director Jane Kennelly said people could find a mentor within the industry they wanted to be in, who could help them to understand what was sought-after and what the key issues for the industry were. Then when they applied for a position, they could then highlight the relevant strengths and experience they already had.
Smooth transition
It can be less financially damaging if you make a big career change in stages, rather than one big hit.
Cut down to part-time or consulting work in your current field and then gradually build up new work.
Financial adviser Hannah McQueen said most people would need to retrain while they were still working, rather than quitting a job to study.
‘‘Very few have that luxury. Those that think they do often find they run out of money or their relationship runs out because it’s not cool for the other person.’’
Save beforehand
If you know you would like to make a change soon, start to put aside as much money as you can in a buffer fund.
McQueen said people would need to be prepared to cut back on spending and save more. But she said it was important to remember that most people’s 40s and 50s were when they should be focusing on putting as much money as possible aside for retirement.
If you choose to divert some of that savings, it is a good idea to have a plan to catch up later.
‘‘It can have really big implications,’’ McQueen said. ‘‘Your late 40s and early 50s are when you should be earning the most and at the peak of your career progression. If you are starting again that might mean you end up working well past 65.’’
Look for free opportunities
Kennelly said people should aim to upskill as much as possible before they made a move.
But she said modern job hunters had a wealth of opportunities available to them. ‘‘There’s so much online for free, you can self-teach.’’
She recommended options including free online university lectures, webinars and blogs and articles from thought leaders. Putting in the time would show recruiters that people were serious about the move, she said.
Be realistic
McQueen said people needed to look at how much time they could take out of work ‘‘before the money runs out’’.
‘‘It’s not just a case of following what you are passionate about but what can your budget tolerate.’’
It’s also important to consider the impact on a spouse. ‘‘Sometimes the spouse can get nervous and it’s interpreted as not believing in them.’’
Budget
If you are moving to a new field, you will probably end up earning less.
‘‘You do need to have an expectation reset around taking a lower-level salary,’’ Kennelly said.
‘‘As much as in your current role you are considered an expert and are remunerated for that, typically when you take on a new role it means a reasonable degree of retraining is required and there’s an expectation it’ll be a step backwards to go forward.’’
McQueen said one of her clients had to accept a 30 per cent pay cut.
Sometimes a job change would come with other adjustments that made a lower pay rate manageable – it might be possible to move out of a big city to another, cheaper centre.
But if it is likely that many of your costs will remain the same, draw up a budget so you can see how you can make a smaller pay cheque work.