Thinking of a career change? Here is what you need to consider, financially

After what feels like an eternity of home-based working, slowly and surely, businesses are now looking to come back to the office, either full time or through a hybrid model. Whilst some may welcome this change, it may open up questions around work life balance and what it means for your lifestyle.

Whilst lockdown proved incredibly challenging for individuals as well as businesses, there was also an opportunity to spend more time at home with loved ones and on what is important to us.

With this in mind, we thought now would be a good time to understand what the impacts, personally and financially, would be if you decided to reflect on your career and take a new direction mid-career, or close to your retirement.

A New Direction

At Carbon, we work with many individuals and their families who have climbed the corporate ladder and became incredibly successful in their careers. We find that often we work with job titles in the “Senior Executive” space, or C-suite. Whilst the renumeration packages of these roles are attractive, the behind the scenes work that allows you to earn these packages is phenomenal! So, what would happen if one day, you asked yourself, “is this all worth it?” and explored a career change?

In your mid to late career, if you chose to leave your role, at say a large corporation for example, and take on a passion project, or work with a start-up that was in your personal area of interest, this is something that could impact your life in a positive way, but if a reduced package is on offer what does that mean for your financial plan?

The first step that we would take with you and your family, is we would explore the new package that is on offer against your current financial plan and assess whether you are still able to meet your goals. The main areas of consideration would be;

Pensions/Retirement

1. How does making the transition impact your ability to maintain your saving and spending?
2. If you will be freeing up time, will you begin to access the pots you built up over time due to a combination of more time to spend and less income to meet that spend?
   
3. If you do begin to spend more, how does that impact your longer term financial position?
   
4. How much time do we have to maximise your saving capacity before you make the transition?
   

Tax implications

If we are looking to maximise savings now, how does this interact with your annual allowance for pensions? Does it make sense to put in more than your annual allowance? This may be the case if you have unused allowances from previous years.

If your pension is currently more than the ‘Lifetime Allowance,’ does it make sense to continue to contribute to your pension?

There are other efficient savings routes we can consider for you to provide a diverse tax portfolio in retirement if it becomes less efficient to continue to save to pensions.

What is right for you and your family

Everyone is an individual, and we are aware of that. When we meet our clients, one of the first things we want to do is understand your aspirations and what is important to you and your family.

The more burden we can take from you, the better. We will work with you to put a plan in place so that you can focus on your wants, and what is important to you, whilst safe in the knowledge that the financial side of things is being looked after by a trusted team. This frees you up to focus on you and your family.

Writing Your Life Story

To conclude, there is no right or wrong direction, only choices, and part of our role as your partner for life, is to equip you with the information and sound advice that will allow you to make the best choice for you, your health, and your family.

If you would like to get in touch to discuss your personal circumstances, please contact Gary Wright for a confidential discussion.

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

Tax and Estate Planning Services are not regulated by the Financial Conduct Authority.