Starting a New Career at Age 50

Peter Richardson is a vice president of Planning Excellence at Northwestern Mutual. 

Most people in their 50s are on the home stretch to retirement, but who says you can’t elevate your career during this phase of your life? Making a career change at 50 could bump up your income, bolster your retirement savings and bring more happiness into your life. But switching things up at this point isn’t always easy. Here are some important things to know if you’re starting a new career at 50.

Why would someone seek a career change at 50?

According to AARP, people are trying to reduce their stress at work and slow down their lives. But any of the following situations can inspire a late-in-life career switch:

• You want more fulfilling work: At this point in your career, you might feel drawn to work that brings you greater satisfaction. That could be something that’s aligned with your passions or helps uplift the community. As you approach retirement, you may be asking yourself, “If not now, when?”

• You’re craving an income boost: After 50, you can make catch-up contributions to tax-advantaged retirement accounts like 401(k)s and individual retirement accounts (IRAs). Changing careers at 50 could lead to higher pay—and the ability to supercharge your nest egg and help with your legacy plan.

• You want to change the way you work: In your 50s, you may be looking to scale back and reduce work-related stress. That might mean taking a role that has less responsibility or allows for flexible work hours or remote work. This type of position can lead to a better work/life balance.

Is it worth changing careers at 50?

Whether switching careers at 50 makes sense for you depends on your financial situation and professional goals. It takes courage to change careers in your 50s. Leaping into a different career requires you to be flexible and to be in a financial situation in which you can afford to take risk. A skilled financial advisor can help you run the numbers and clarify how a career change could impact your short- and long-term goals. Below are some general considerations to keep in mind.

How would a career change affect my retirement savings?

If you have a workplace retirement plan like a 401(k), you’ll need to decide what you’ll do with your retirement savings if you change jobs. Depending on the quality of the investments in your current employer’s 401(k), you may choose to do nothing, roll your balance into a new 401(k) with your next employer or opt for an IRA rollover. If you choose to roll assets into another plan or an IRA, remember that if you take money out of your 401(k), you’ll have only 60 days to deposit it into another 401(k) or IRA. If you wait longer than that, you could encounter a 10 percent early withdrawal penalty.

What will you do about other employee benefits?

Retirement plans aside, you might also have health insurance, disability and life insurance through your current employer. Each of these provides protection for you and your financial security, and they are important things to think about if you’re starting over at 50. Will your new employer offer health benefits? If not, how much will it cost to purchase a plan through healthcare.gov? This could be a lot of money. The average health insurance premium for a 50-year-old with a silver-tiered plan is $816 per month, according to a Valuepenguin analysis.

Is now the right time?

You might want to hold off making a change if:

• You’re expecting a work bonus in the near future.

• You’re about to vest in your workplace retirement plan.

• You’re required to wait to exercise stock options.

• Your employer will be matching your 401(k) contributions soon.

When you decide the timing is right, you’ll also want to ask your HR department whether you’ll be compensated for unused vacation days. Just remember that taxes will be withheld from this payment.

How can I change my career at 50?

Take the six steps below to help launch your career change at 50. Doing so can help ensure a smooth transition.

• Update your résumé, positioning your experience for how it will help you in the new career.

• Network and attend industry events in order to build relationships now so you can tap your professional network for job leads.

• Craft your responses to potential interview questions, and come up with questions of your own.

• Research the average pay for someone with your experience in your area. This can help you negotiate better.

• If you’re transitioning to a new industry, pick the brain of someone who’s already doing the job you want.

• Consider working with a job coach who specializes in midlife career changes.

What financial steps should I take once I’m in my new role?

After accepting a new position, schedule a meeting with your financial advisor. You’ll want to revisit the following:

• Your retirement savings plan: You might be able to contribute more than you were before. If you’ve taken a pay cut to pursue more satisfying work, you may need to modify your retirement contributions to align with your budget.

• Your inheritance and estate plan: This is important if your income has changed. Your advisor can help ensure that you’re still on track to meet your legacy goals.

• Your Social Security plan: Given your career change, when do you expect to begin taking Social Security benefits? You’ll get a larger monthly payment if you wait until at least your full retirement age (that’s 67 for anyone born in 1960 or later).

Switching jobs can be a major financial event, especially if you’re making a career change at 50. The right financial advisor can help you plan and point out opportunities and blind spots that might otherwise go overlooked. They can also guide you through prioritizing your financial well-being every step of the way. At Northwestern Mutual, your advisor can help you prepare a financial plan that fits your unique situation. We can help you navigate the next chapter of your career and financial life. Connect with your Northwestern Mutual advisor today to get started.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.