How a Financial Advisor Can Help
Navigate a Career Change
Changing careers can be one of the most exciting—and financially stressful—decisions you make. Whether you’re pursuing a new passion, shifting to a different industry, or seeking more flexibility for better work-life balance, making a change comes with financial hurdles like adjusting for income fluctuations, navigating new benefits, and managing your retirement savings.
A financial advisor can be your key ally in navigating a career change, helping you make informed decisions and keeping your financial future on track. Taking the plunge to work with one can be intimidating when going through career transitions, but it’s an important step for your financial future. Here’s how a financial advisor can support you during a career change.
Career Changes: More Common Than You Think
Switching careers happens more often than you might think. According to the Bureau of Labor Statistics (BLS), the average person will change careers 5-7 times throughout their working life, with workers holding about 12 jobs before turning 52. So if you’re considering a career change, you’re not alone.
But any career move, whether you’re stepping into a higher-paying role or taking a short-term pay cut, brings financial adjustments. A Bankrate survey found that 56% of Americans are uncomfortable with the amount of money they have saved for emergencies, and these feelings often intensify during career transitions. This is where a financial advisor can offer the most value.
Managing Income Fluctuations—Pay Cuts or Pay Raises
While career changes are often associated with temporary income drops, they can also bring pay raises or salary boosts. Regardless of the situation, it’s essential to plan for these shifts and working with an advisor can help!
15%
of job switchers took a pay cut.
*Wall Street Journal, “They Chose to Take a Pay Cut—and Say They’re Happier”
What to Do in the Case of a Pay Raise:
- Reassess your budget: A financial advisor can help you determine how to use your additional income wisely. Whether it’s paying down debt, boosting your savings, or increasing contributions to your retirement plan, an advisor helps you make the most of your new salary.
- Avoid lifestyle inflation: One risk of a higher income is lifestyle creep—spending more as you earn more. A financial advisor will keep you grounded, ensuring that your newfound wealth contributes to long-term financial goals rather than short-term indulgences.
- Maximize tax efficiency: Earning more might bump you into a higher tax bracket. Your advisor can recommend strategies, like increasing contributions to tax-advantaged accounts (401(k), IRAs), to minimize the tax burden and keep more of your raise.
What to Do in the Case of a Pay Cut:
- Plan for income gaps: Whether you’re returning to school or taking a pay cut in exchange for greater flexibility, a financial advisor can help you create a sustainable budget that covers your essential expenses while managing reduced income.
- Explore supplemental income: If the pay cut feels too tight, an advisor can help you explore side income opportunities or new ways to diversify your income stream to bridge the gap.
Optimize Benefits in a New Job
Switching jobs often means navigating a new set of benefits, from health insurance to retirement plans. A financial advisor can:
- Help you understand and maximize your new benefits: From employer-sponsored health care to stock options and bonuses, an advisor can guide you in making the most of your compensation package.
- Increase retirement contributions: With a higher salary or better retirement benefits, it’s the perfect time to increase your contributions to 401(k)s, IRAs, or other tax-advantaged accounts. An advisor ensures you’re on track to meet your long-term financial goals.
Managing Retirement Assets During a Career Change
One of the most critical decisions during a job change is how to handle your existing retirement savings. There are typically three options after a career change:
- Leave it with your former employer: Some employers allow you to keep your 401(k) where it is, but you won’t be able to make new contributions.
- Roll it into your new employer’s plan: This is a good option if your new employer offers a solid retirement plan and you want to consolidate your savings in one place.
- Roll it into an IRA: This option offers more control and investment options. A financial advisor can help determine if rolling over your assets into an IRA makes sense for your situation, ensuring your retirement savings continue to grow.
The Long-Term View: Pay Raises, Pay Cuts, and Your Financial Future
Whether your new job brings a pay increase, cut, or a shift in benefits, it’s essential to think long-term. While career changes have short-term financial impacts, they can also affect your long-term financial health, from your retirement savings to future earning potential.
A financial advisor looks at the big picture and ensures that your career move supports your overall financial goals. They’ll help you plan for immediate changes in income, optimize new benefits, and make critical decisions like rolling over your 401(k) or adjusting your retirement strategy.
Why You Should Consider a Financial Advisor During Career Transitions
Making a career change is an exciting time, but it’s also a moment when financial planning becomes crucial. A financial advisor can:
- Manage income fluctuations: Whether you’re receiving a raise or dealing with a pay cut, they’ll help you make the right financial decisions.
- Optimize benefits: Get the most out of your new job’s perks, from health insurance to retirement savings plans.
- Handle retirement assets: Rollover your 401(k) or consider an IRA, ensuring your retirement savings stay on track.
Career changes offer fresh opportunities, but should also incorporate careful financial planning. A financial advisor can help guide you through every step, keeping your finances in order while you focus on building your next professional chapter.
The right advisor will understand your unique needs and goals, making it easier to move forward with confidence. With Willow’s Advisor Match, finding the right advisor to support your estate plan is quick and seamless.
About Willow
Willow connects you with vetted financial advisors who truly understand the big moments in life—like buying a home, navigating career changes, or going through a divorce. It’s not just about finding an advisor, but about building a meaningful, long-term relationship with someone who gets your goals and challenges. Using a concierge matchmaking approach, Willow ensures you feel confident and empowered as you plan for whatever life throws your way, making financial advice feel less transactional and more like finding the right partner for your journey.
