Here in Connecticut, October is known for its transitions. As temperatures dip and the air becomes crisp, leaves on trees change colors from vibrant green to deep gold, brilliant orange, and fiery red. Like October weather in Connecticut, many professionals’ approach to their careers and expectations of their finances are changing. The notion that you go to school, work in one job, and retire at age 65 to enjoy a few years of blissful existence without financial concerns does not represent reality for many people today.
Many people now live until their late 80s. Most people want to enjoy a quality of life physically, mentally, emotionally, spiritually, and financially, on their terms. Pensions that pay retirees comfortable incomes that adjust with inflation are few and far between, and Social Security is designed to pay for only about 40% of “average earnings”. As more people realize this, they are reconsidering their own expectations for work, retirement, and how they spend their time and money.
I am one of those people. For years as I worked in different jobs, I fantasized about becoming a Certified Financial PlannerTM (CFP®). I wanted to be a fiduciary financial advisor who provided clients a safe space to talk about life’s uncertainties and manage clients’ investments as they realized their life goals according to financial plans that I developed with them. However, time and careful planning were necessary for me to make the professional move. My husband shared my entrepreneurial spirit. Early on in our marriage we agreed to live within our means, build up emergency savings, and invest small amounts of money regularly. We wanted our money to grow so we could have choices and flexibility over time.
As we built up our finances, I researched training programs for becoming a CFP®. I spoke with successful CFP® professionals and other advisors who worked in different types of companies throughout Connecticut. Based on our financial plan, I determined I needed to continue working a full-time job while completing training.
Before making the move and starting the training, my husband and I talked extensively about the financial strains the change would have on our lives. We were honest and realistic about the stress that would exist and could linger for years as my new business grew. We evaluated benefits that we counted on from my existing job – like health insurance and my 401k plan – and came up with new strategies to ensure our health coverage and retirement savings continued.
How does this apply to you? If you want to initiate a professional change or create a new vision for your own retirement, here are four strategies that I offer you:
1. Focus on What You Can Control. Rather than focus on general guidance or rules of thumb around your finances, as soon as you begin thinking about a change, start saving as much as possible, spending as little as possible, and consistently invest and pay off debt until you have more clarity on your situation and your transition stabilizes into your new routine/next chapter.
2. Your Due Diligence. Understand the financial risks and tradeoffs associated with your transition, beyond how big your paycheck will be. For instance, if you want to retire before Medicare is available to you, and you depend on your current employer for health insurance, understand how much you will need to pay for health insurance out of pocket.
3. Create a Financial Plan. In my experience, the hardest part of changing jobs, reinventing your career, or planning for retirement, is managing uncertainty. A financial plan provides structure, prioritization, and a path for dealing with the unknown. At a minimum, it should include a budget, emergency savings, regular reviews of what you own and what you owe throughout your transition, and contingency plans that you commit to and follow, should your finances and/or lifestyle derail during your professional change.
4. Engage People to Help You. I could not have initiated my own professional transition had it not been for my supportive family and the insights that other professionals provided me. If you want help planning for the financial impact of a career change or navigating retirement, talk with a Certified Financial PlannerTM (CFP®). These specialists have completed extra training in personal finance and are fiduciaries. Everything that they say and do is for your best interest, rather than their professional benefit.
As we continue to enjoy this month of transition, take comfort that life is continuously changing for nature and for all of us. If you ever want a confidential, safe place to talk about life’s uncertainties and your specific financial situation, know that I am here.
Caroline Wetzel is one of Natural Nutmeg’s 2019 and 2018 10Best Winners for Business/Life Coach. Caroline is a Certified Financial PlannerTM (CFP®) and Vice President, Private Wealth Advisor with Procyon Private Wealth Partners, LLC. Procyon Private Wealth Partners, LLC and Procyon Institutional Partners, LLC (collectively “Procyon Partners”) are registered investment advisors with the U.S. Securities and Exchange Commission (“SEC”). This article is provided for informational purposes only and for the intended recipient[s] only. This article may also include opinions and forward-looking statements which may not come to pass. Information is at a point in time and subject to change. Procyon Partners does not provide tax or legal advice.