Changing careers in your 40s or 50s used to be rare. Now? It’s becoming the norm. Whether it’s chasing a long-held passion, pivoting to a more flexible role, or stepping away from corporate life to start something of your own, midlife career shifts are happening more than ever.
But let’s be honest—career changes at this stage come with higher stakes. You’ve got responsibilities, maybe a mortgage, possibly kids in (or heading toward) college. A financial misstep now can have ripple effects down the line. That’s why smart financial planning is key before you make the leap.
Step 1: Get Real About Your Finances
First things first—where do you stand financially? Before making any big moves, take a hard look at your:
Savings: Do you have an emergency fund to cover 6-12 months of expenses? If not, now’s the time to build one.
Debt: High-interest debt (credit cards, personal loans) can make a transition much harder. Prioritize paying it down before cutting your current income.
Spending habits: A career change often means a temporary dip in income. Where can you trim unnecessary expenses to create breathing room?
Think of this as putting your financial house in order before you step into the unknown.
Step 2: Plan for the Paycheck Gap
A career shift rarely comes with a seamless paycheck transition. If you're starting a new business or moving into a different field, it could take months (or longer) before you’re back to your previous earnings level.
So, what’s the game plan?
Bridge the gap with savings: If possible, set aside enough to cover at least 6 months of living expenses.
Explore part-time or freelance work: Can you consult in your current field while ramping up your new path? Many career changers find this a helpful way to smooth the transition.
Downsize strategically: Could a smaller home, fewer subscriptions, or a lower-cost lifestyle in the short term give you more flexibility?
Step 3: Make Your Investments Work for You
Your retirement savings shouldn’t take a backseat just because you're switching things up. In fact, midlife is a crucial time to make sure your money is working for you, not just sitting on the sidelines.
Keep contributing to retirement accounts (401(k), IRA) if you can. Even small contributions now will compound over time.
Review your asset allocation—should you adjust your portfolio to match your new income situation? A financial advisor can help ensure your investments align with your evolving goals.
Consider rolling over a 401(k) if you’re leaving an employer. You don’t want to lose track of old accounts in the shuffle.
Step 4: Factor in Healthcare and Benefits
One major perk of traditional employment? Employer-sponsored benefits. When switching careers—especially to self-employment—you’ll need a plan for things like:
Health insurance: Can you join a spouse’s plan? Will COBRA bridge the gap? Would an ACA plan work for you?
Life and disability insurance: If your employer covered these, will you need to get your own policies?
Retirement benefits: If your new career doesn’t offer a 401(k), are you set up with an IRA or solo 401(k) alternative?
These aren’t the most exciting financial considerations, but overlooking them can derail even the best career transition.
Step 5: Get Financial Advice for Career Change
No two career changes look the same. Some people move into a lower-paying but more fulfilling field. Others take a financial hit for a few years to build something bigger. The key is having a financial strategy tailored to your situation.
At Halter Ferguson Financial, we help clients navigate these transitions with confidence. Whether you need a plan to maximize your savings, optimize your investments, or ensure financial stability during your shift, we’re here to help.
Thinking about making a career change? Let’s talk about how to make it work—financially and strategically. Reach out to us today for personalized guidance that keeps your long-term goals on track.