It seems like everyone is either getting a new job or thinking about it.
Many people have made job changes recently and, with low unemployment across the country, even more Americans say they want to take advantage of new career opportunities, according to the 2022 Retirement Risk Readiness Study* from Allianz Life. More importantly, workers have the upper hand in the labor right now with what’s been dubbed the Great Resignation continuing.
Of those 10 years or more away from retirement, more than a quarter said they are likely to take a new job this year, either with a new company (31%) or by going into business for themselves (26%). Even more near-retirees (those within 10 years of retirement) are planning an employment change in 2022 – 33% with a new company and 32% thinking of switching to self-employment. Some said that they wanted a new job with a higher salary because of ongoing inflation.
While some new jobs come with higher salaries and better benefits, unfortunately others do not. Some worry a change in employment could affect how they pay for necessities like housing and food (57%), according to the study. What’s concerning here is how workers think a job change could affect their retirement security:
• 60% worry a new job would reduce the amount they can save for retirement.
• 56% worry it would require them to completely stop saving for retirement.
The best-case scenario is that a new job will increase your pay and in turn help you increase the amount you put toward your retirement goals. But, no matter what, a change in employment is a great time to revisit your financial strategy. Here are a few things to consider.
Lifestyle creep is real
More than half (54%) of non-retirees in the study admitted to spending too much money on non-necessities – and that tendency can be multiplied when we begin to earn more money. Upgrading your lifestyle when you get a pay raise feels good. You can treat yourself, just within reason. Do not upgrade every aspect of your life at once. Beware of how lifestyle creep could limit your ability to save for retirement.
It is good practice to continue to keep (and regularly check in on) a budget, even if your paycheck went up. This helps tamp down rampant spending.
Instead, take this opportunity to make a different kind of upgrade – to your savings. That additional money in your check can be put to work toward financial goals like paying off debt, boosting (or starting) you emergency fund or putting money away for a down payment on a house. It would also be wise to increase your contributions to retirement plans, such as a 401(k). If you boost your …….