Saving for a Midlife Career Switch

Today, Chris White is a certified financial advisor and a published author. People have sought his advice on their financial dreams and fears for a quarter century. But before he began helping people with money matters, he was on a much different career path—as the president and founder of a geohydrology company in Vermont.

The jump from scientist to financial expert is a big one, but White is hardly the only person to make a major career transition. While the Bureau of Labor Statistics doesn’t track how often people change careers (since, it says, no consensus exists about what exactly constitutes a change), anecdotal evidence suggests that this is an increasingly common move for many people.

A voluntary change in employment isn’t something you want to do without careful planning. In fact, it’s a good idea to start preparing years before starting a new career.

“Make sure your balance sheet is in as good a shape as it possibly can be,” says White. “That requires having lived a life with some care.”

It’s important to recognize that along with a shift in professions, you’re going to face a shift in salary—most likely a negative one at first. Regardless of how high up you are on the ladder in your current field, you may well be starting at entry level once again. As part of your second-career planning, it’s a good idea to start living at that lower salary as much as three years before you make the change.

“Train yourself to cut your expenses earlier rather than later, so it’s not so much of a shock,” says Dan Andrews, founder of Well-Rounded Success, a personal finance consultancy in Fort Collins, Colo. “If you can accustom yourself to this financial stress when you have more money coming in, it won’t be so jarring when you change jobs.”

Another advantage of adjusting your lifestyle while at your current job is that it allows you to eliminate debt and put together a rainy day fund in a high interest savings account or money market account. You should also begin to plan for a different kind of retirement, perhaps with savings in an IRA.

To ensure that your salary doesn’t stay at that entry level in your new career, spend some time investing in your education before you make the change. There’s a good chance you’ll need new skills, and this may be your best chance to learn them.

White also advises career switchers to moonlight or volunteer in the new industry to determine if the job is as interesting as they hope it is. Many people find this isn’t the case.

“We have a tendency to draw things in straight lines,” says White. “You say to yourself, ‘I’m going to go from Point A to Point B,’ but usually you stop off at Points C and D along the way. It’s not a straight line. And sometimes Point C or Point D might be more interesting to you.”

Finally, it’s not a bad idea to get a trusted friend or colleague to offer their honest opinion about your plans. They might tell you that you’re making an emotional decision about something that could impact your financial security. It could be, for instance, that you like your career but not where you’re currently practicing it—and maybe you’re too close to the circumstances to realize that.

“This is definitely a situation where you want a second set of eyes,” says Andrews.

Chris Morris regularly contributes to national outlets, including Fortune, CNBC.com, Voice of America, Variety and Common Sense Media, as well as dozens of other major publications.