Starting Over

Challenges and opportunities will face us over the years. New career changes, learning a skill later in life are all changes, and sometimes those changes can be daunting.

So you wake up one morning after 25 years on the job, and your boss shares with you that your services will not be needed in six months. The company that you once loved will give you three month’s salary as severance.  Now what? Or you wake up one morning, and the company you once loved is no longer the same, and you plan your exit for six months down the road. This time there will be no severance. Now what?

Both situations call for very similar thoughts and strategies. What you planned for at the beginning of your career will now help dictate your strategy. The first thing to understand, in my opinion, about what most call “retirement” is that you must replace your 100% standard of living not some fictitious percentage of your income. Thus those who live the farthest within their means have the best chance of peaceful change.

The first scenario is when you have been ousted and though it might be hard emotionally to deal with a serious pay cut going in a new direction, margin in your life (living with less debt and overhead requirements) allows you to be more nimble. If you think your job is in jeopardy, start looking at your finances now and eliminate unnecessary spending. This is not an attempt to give you a negative outlook on life but helping you work toward being a well prepared survivor.

For both situations, the job change often puts individuals in a lower tax bracket, meaning less of their money going to the IRS. Additionally, if you have saved well along the way, you can reduce the percentage you are saving today and allow the remainder to continue to grow with compound interest. At later stages of your life, what you have already saved matters more than what you add today assuming you had been diligent in your savings beforehand.

The big challenge in both situations is healthcare cost. Pay very close attention to requirements for getting on the platforms via the Affordable Health Care Act as there are base requirements where an extra dollar of taxable income can cost you more than you would ever imagine. We have seen that fate more than once.

Change is scary but it can be exciting. If you have adequately prepared you will survive and possibly even thrive. If you haven’t prepared, it is not too late to start. Every dollar you use today to add to savings or to reduce debt is a dollar you are using to support your future standard of living.  That means either by your choice or the company’s choice for separation of service that you have a much better chance of a peaceful life after that job.

Disclaimer: Joseph Clark is a Certified Financial Planner™ and the Managing Partner of Financial Enhancement Group, LLC an SEC Registered Investment Advisor. He is the host of “Consider This” found on WIBC Saturday mornings from 6-7a.m. as well as three other Indiana-based radio stations. Joe has served as an Adjunct Assistant Professor at Purdue University where he taught the capstone course for a degree in Financial Counseling and Planning.

Financial Enhancement Group is an SEC Registered Investment Advisor.  Securities offered through World Equity Group, Inc., Member FINRA/SIPC, and a Registered Investment Advisor.  Investment Advisory services offered through Financial Enhancement Group (FEG) or World Equity Group.  FEG is not owned or controlled by World Equity Group.

Joseph Clark and World Equity Group, Inc. do not provide tax or legal advice. For tax advice consult with a qualified tax professional. For legal advice consult with an attorney.