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Can You Switch Careers and Still Reach Your Retirement Goals?

Can You Switch Careers and Still Reach Your Retirement Goals?

September 12, 2018

Every individual working for decades has one goal: retirement. You toil away at your current job or long-term career and no doubt have a vision of winding down your working days at some point in the future. Of course, your retirement savings goals are crucial in this plan. Americans should be working to retire, not working to survive. However, as time goes on, you might find yourself looking for a new job or even an entirely different career field. While USA Today notes that job hopping can hurt your retirement goals by forcing you out of 401(k) plans during a waiting period and losing beneficial employer matches, it is possible to switch careers and not put a dent your retirement goals.

Make Sure You Know Your Own Worth

Changing jobs or careers often means changing income levels. Your income could go up or you could find it going down instead. Unfortunately, many individuals changing careers often shortchange themselves because they do not adjust their market value accordingly. When your own perception of your worth is not anchored in accurate numbers for compensation, you put yourself at a disadvantage in conversations with potential employers. Remember, your market value is not a fixed number. You can boost your value to potential employers by pointing out your transferable skills (communication, teamwork, and leadership) and highlight how those skills apply across all fields and roles. 

Be Sure to Run the Numbers

Regardless of how a conversation over compensation plays out with a potential employer, you need to run some numbers on your own. The amount you receive in compensation from a new employer is only half of the equation; the other side includes your expenses. Should you find yourself making less money in a new role, will you adjust your expenses downward accordingly to fit that new income level? Or, conversely, will you attempt to maintain your current lifestyle on a lower income?

It is important to slow down and consider how your new income will impact your Social Security benefits. Changes in your income could raise your benefits in the future or result in lower benefits depending upon which direction your paycheck goes with a new job. Your Social Security benefits are measured by your date of birth and earnings history. You can run those numbers on the Social Security Administration website to get an idea of how a career change might impact you. 

Don't Forget Your 401(k)

Before you make the final decision to change jobs, think about your 401(k) options. You should know exactly what retirement benefits are offered by a potential new employer before you agree to switch jobs. More importantly, you should compare those benefits to the ones you currently receive at your job.

Switching careers late in the game is often viewed negatively, but if you take the right steps along the way you can switch careers without hurting your retirement goals. The key is to do your homework and follow a reasoned process to make sure the change will work for you and your family.

For further help with the financial needs of switching jobs contact Manhattan Ridge Advisors.


The views expressed are not necessarily the opinion of Social Advisors, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice.  Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.