Dear Kim,
I’ve spent many years building my career in a single industry, but I’m now contemplating a significant career change. This new path is something I’m passionate about, but it may initially come with a lower salary, and the transition feels financially daunting as I’m in my mid-forties. I also just found out that my 401k match won’t start until I’ve been at the new job for 6 months. How can I financially prepare for this career shift to ensure I don’t compromise my long-term financial goals? I’m really worried that I won’t be able to maintain my current lifestyle AND save for retirement. I want to make sure I’m making a smart, calculated decision without risking my financial security.
Thanks,
Financially Focused
Dear Financially Focused,
Making a change such as this can be daunting, for sure. The place I would suggest beginning is with your budget.
Do you know how much it takes to run your household each month? Once you know that number, you can see if your new reduced income will cover it. If it won’t, do you have enough money put aside to make up the difference until your income rises? And how long will that be?
Your 401(k) match not starting for 6 months won’t be a huge loss in your retirement savings, especially if the new job will have a salary upside down the road. You just have to make sure you can make your monthly bills until your salary goes up. Compromising your long term goals for a short period will be ok, if you can make up the difference once your salary goes up.
Best of luck in your new endeavor, change can be a really good thing.
Kim
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