In the past financial planning has focussed on helping people protect and save their income or investments. We assumed a steady inflation tracking income in our retirement models and insured against disasters. However, we can no longer assume straight-line careers that will produce steady incomes. We must start to plan for frequent career changes, much longer working years and include discussions about career planning in our financial planning.
Why we need to rethink our careers
Forces that are accelerating change like technological advances and global warming are redefining the kinds of skills that are needed in the global workforce. The job market is changing and workers need to adapt to that change.
In addition, people live longer and stay healthy for longer than ever before. More and more people are working beyond eighty and some hundred-year olds are still exercising, and even working. We have been given extra time, an additional one or two decades at a time when it is highly unlikely that one career can last that long.
The next generation should expect to plan for reaching one hundred and career challenges due to accelerating change. However, for people already in midlife, these challenges have emerged halfway through their lives.
It has surprised many because they had expected to retire at the same age as their parents. What is evident in my conversations with clients and friends, is that few people already in midlife have given their options sufficient thought. Many people know they need to make changes but do not constructively engage with this change.
What will you do with extra time?
When we think of living to a hundred, we picture a miserably long old age, but that’s where we’re mistaken. We are given this extra time in midlife, not the end of life. Most seventy-year-olds with decent healthcare, now resemble our grandparents at fifty.
However, in midlife, most of us cannot bear the thought of working at the same pace for an additional twenty years. Work has just become too demanding and stressful. Some get bored in a job they know well or lose interest in corporate politics. Or we might face forced early retirement.
Even if you are one of the few who have enough capital to retire at the ‘normal’ retirement age, you still need to figure out how to spend your extra time. Work might be the best option unless you have interests and a community outside of your work. You will need a purpose for all that extra time.
It follows that traditional retirement planning in midlife must be expanded to include a career review so that extra time can be productive and joyful.
Over the last two years, the pandemic spurred many people to rethink their lives. It made people think, is this what I actually want to do? And if not, what else can I do?
What are your options?
You can pivot
We love stories about people who made radical changes and succeeded. The librarian who started medical school at midlife and became an ER doctor or the investment banker who became a best-selling fiction author. These stories require that you have the capital to support yourself, or that your spouse or the bank provides funding for your new direction.
If this is you, consider making that radical change. Was there something you wanted to do as a child? Something you couldn’t afford to study as a young person? Perhaps now is the time to pursue those dreams. Reflect on how you feel about your current work and how it might feel to pursue another radically different career?
These stories inspire us. Although not impossible, they are rare and most people must consider gradual shifts in their careers.
Achieve work/life balance
Maybe you love your work, but you don’t love the pace and stress anymore. Perhaps it is time then to review whether you can change the way you work.
Even if you love the pace, you must consider the impact work has on your health. It makes little sense to sacrifice your health for short-term gain when you will need it to continue working through extra time. Become cognisant of creating career longevity.
Perhaps by adjusting your hours, or limiting the number of clients you work with, you can achieve better balance, and increase your chances of working for longer.
A lawyer-client recently achieved his dream of living at the coast and finding time for exercise by taking on fewer clients. He has started to enjoy his work again and can probably now continue to work for much longer.
Achieving daily work/life balance is not easy. Thinking about integrating work and life may help to balance all aspects of your life over weeks or even the year. This may mean that you start taking more holidays or switch to a four-day week.
Review your skills and experience
When you list your skills and experience, don’t just think about your direct line of work. As a parent, you may have picked up skills in negotiation (especially with your teenagers), organisation or as a school board member. Perhaps you can turn your hobby, charity work or sport into an additional or alternative income.
A friend recently turned her love for gardening into a business by turning her garden into a flower farm. She now sells bunches of fresh flowers in her community. Another became an international running coach by turning his love of running into an online business.
A review of all your skills and experience may not only strengthen your self-belief but also highlight something you really love doing and could use.
Adding to your skills
A few friends in their fifties went back to studying again. They were strategic. They picked areas that worked for the future - a masters in future studies or sustainable development not only meant they could change the focus of their work, or start their own business, but it also kept them relevant to a changing world. In my own life, doing a writing course has helped me to add writing as an element of my work. A coaching course has helped our team to conduct better conversations with our clients and make our work more meaningful.
What skills can you add to your portfolio to expand your work or make your work more meaningful? Coaching, teaching, design, writing or computer programming might be directions that can help you extend your work. It is about adapting your current work so that you can earn for longer.
In the second half of life, we often want to move our careers in a less technical direction. It is natural to veer towards strategic or holistic work. We become better at recognising patterns and seeing the big picture, whether it is in coordinating a team of medical specialists to treat a patient with a complex disease or finding the solution to a family’s complex financial structure.
We become better at jobs that include teaching or mentoring. We like to apply our technical knowledge to help others. We become better at packaging information that makes learning easier.
We may also be better at communicating our ideas or solutions to others.
It might not be possible to change your current job to incorporate these elements, but perhaps there is another industry that can benefit from your insight?
What’s the next step?
Making big changes in midlife, especially in increasingly uncertain times, can be scary. However, not making those changes when you know, even on a subconscious level, that your career won’t last long, is equally scary. Jumping to become a consultant in your field may also not be advisable.
From my own experience in leaving a corporate to start Foundation Family Wealth, I know that clients may not feel comfortable supporting you in an unproven venture. I could make that jump because of my husband’s income and an investment portfolio as a backup. If you are considering a jump to an entrepreneurial venture, make sure that you have enough capital.
Perhaps there is a small, next step you can take. Start saving now so that you can make your move in a few years. Start investigating your next career. Take that course.
Do the numbers
Whatever your next career move, carefully consider the financial implications of your decision in advance. If you have not engaged with a financial planner, perhaps now is the time for a thorough review of your affairs.
You must understand how your income will be impacted by your career decision and what your capital can fund. You must know how long your capital can last if you stop earning an income. A thorough financial planning exercise will help you with your decisions.
The numbers will tell their own story. The numbers will help you make your decision. Often clients are surprised by how small changes to their income or lifestyle can alter their financial situation radically over time.
Consider lifestyle changes. Start by considering whether your health or relationships need priority over the upkeep of a big property or extravagant holidays. Also, just cutting out a few luxury expenses might mean you can change the course of your life. It is often pride or convenience that stands in the way of necessary changes.
Some of my most rewarding work has been with people who wanted to divert into more meaningful, but lower-paying careers. By careful planning years in advance, we have helped clients leave corporates to do consulting work, change to working in non-profit organisations, or leave the city to work in the bush.
If you do not have a plan for your extra time, I encourage you to review your life. Do the numbers. Reflect on how you feel about your work. Consider your options. Take the small first steps.
Do it now while you have more options and the luxury of time and choice. Later you may not have that freedom.
At Foundation Family Wealth we combine our technical expertise and experience in helping people through transitions, as well as our coaching skills to help our clients work through different scenarios. Contact us to request a financial plan or an update on your current financial plan.
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