I recently attended a going-away party for a family who is relocating to Florida—new job, new home, new state. Amidst all the excitement and well wishes, it started to dawn on me: a lot of people are switching jobs lately, including many of my clients, family, and friends. Nearly 10 years after the Great Recession, it seems American workers have resolved their crisis of confidence—and this observation isn’t just anecdotal.
According to the Job Openings and Labor Turnover (JOLTS) report, issued by the U.S. Bureau of Labor Statistics, 2016 has been a banner year for career opportunity. Job openings long ago returned to their pre-recession level (March 2014) and surpassed their pre-recession peak (August 2014). Now they’re climbing higher still, up to 5.75 million this spring.
Meanwhile, the employee “quits rate” is averaging around 2.1 percent, just a hair below the decade high of 2.2 percent. In short: employers are struggling to find qualified people, and workers aren’t afraid to walk out the door when it makes sense.
But when does it make sense? Is now a smart time for you to reconsider your current job? And do you need help? Let me go over some of the reasons why career change is on the rise, alongside key cash flow questions (that financial advisors are well-suited to answer)
1. The Job-Hopper Stigma Is Fading
It seems crazy, but a few of my grandparents worked for the same company their entire working careers! It wasn’t too long ago that someone who switched jobs every few years was seen as a risky hire. However the risks and rewards associated with “job hopping” have changed a lot over the past generation. Loyalty from the employer AND the employee has faded. For those who do stay put for a lengthy career, the bad news is that 30 years with the same company doesn’t entitle you to a generous pension plan and a gold watch anymore. (According to a Payscale report on employee turnover among Fortune 500 companies, “longest average tenure” now caps at 20 years. On the low end, companies like Amazon and Google struggle to keep the average employee for just one year.) The good news is that hiring managers understand this, and don’t frown on periodic job changes like they once did.
So if your skill set or experience level is in high demand, I encourage people to shop the market. Whereas a few years ago, employees were thankful to HAVE a job, the tide has turned. In fact, one Forbes contributor contends that staying with the same company for more than two years, over time, can reduce your lifetime earnings by at least 50 percent… As my Father once told me when I started my career, “the biggest raise you will ever get is from a new employer, not the current one.” If you think you’re leaving cash on the table by staying chained to your desk, it’s worth having a conversation with a money management professional.
2. Generation X Is Sandwiched (and Stressed)
It’s a cliché to think that Millennials are leading the charge for work-life balance. Although Generation Y is most often associated with lofty career ideals, Generation X—my generation—is increasingly saddled with tough realities:
- Forty-seven percent have a parent age 65 or older and are either raising a young child or financially supporting a grown child.
- Fifteen percent are providing financial support to both an aging parent and a child.
- Among those who are acting as caregivers, fifty-five percent feel overwhelmed, while a whopping ninety-two percent report feeling physical symptoms of stress.
It’s no wonder I see so many people my age, in their 40’s and 50’s, making career decisions based on quality-of-life considerations first—then backing into the question of financial feasibility: how can I make this work? If you recognize yourself in this situation, consider how a financial advisor might be a valuable resource. Advisors are poised to run the hard numbers—relocation expenses, cost-of-living differential, household money management—so you can make a more informed decision.
3. Fifty Is the New Forty
As far as retirement timelines go, 50 may well become the new 40. Because unfortunately, a lot of families aren’t where they need to be. If you’re behind in your savings and worried about running out of money in retirement, a new job may provide the salary boost you need to get back on track without drastically altering your household budget. Just last year I was able to show someone dramatic improvement in their retirement projections from the benefit of their salary increase.
If you were suddenly in a position to allocate hundreds or thousands more toward your 401K—even 10 years removed from retirement—you might see a compelling change to your retirement projections. Want to see how compelling? Give us a call.
Whatever the contributing factors—retirement goals, health reasons—career change is a serious transition. Use our guide to evaluate the financial pros and cons of making a switch.
Derek Amey serves as Managing Director and Portfolio Manager at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail him at firstname.lastname@example.org.
The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Derek’s opinions and comments expressed on this site are his own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.