You’re probably going to need to work longer than you imagined when you were first starting out. After all, you might live to be 100.
So let’s call it a 50-year career, at least. That’s a long stretch without interruption. But what people seem to have learned during the coronavirus pandemic is that choosing to step out of the working world for a while can be rather pleasant — even preferable.
That raises a challenge: How to create a financial foundation for a new kind of career longevity, one in which work may start and stop and start again, perhaps several times.
The traditional personal finance infrastructure doesn’t make it easy. The earlier you draw on Social Security’s retirement benefit, the less you receive. Other retirement savings vehicles generally have their own restrictions. Finding and fighting for health insurance is a part-time job in its own right. Many forces conspire against the peripatetic.
Even so, workaday employees — particularly younger ones — are scheming ways to do it. “There’s a really short list of silver linings to the pandemic, but one of them is that people have really spent time thinking about what’s important to them,” said Ann Garcia, 54, a financial planner in Portland, Ore. “And a lot are concluding that their job isn’t it.”
It is tempting to rush headlong into financial advice right here. Roth I.R.A.’s can be your friend, whether you’re young and contemplating a break in a decade or in the middle of your career and thinking about taking one next year. Try to amass some rental or other passive income. And make a plan for health insurance.
But Kevin Mahoney, 37, a financial planner in Washington, D.C., who counsels many people around his age, urges a beat or three of self-reflection before you do anything else.
“What is important to you? Why? And what’s stopping you from doing that?” he said, recounting some of the first questions he suggests that new clients ask themselves, especially those who want to pursue a nontraditional career trajectory. “The tactics — what retirement accounts to use and things like that — are all very secondary.”
So ignore the accounts, at least at first. But any hiatus notions do require an accounting to your stakeholders — whether you intend to rest, reboot or utterly reinvent your working life.
The primary person in on the decision should be your spouse, if you have one. After all, if you need that person in order to maintain health insurance and a regular stream of income, it puts pressure on them. This is not the type of situation where asking forgiveness is preferable to asking permission.
Then, consider what your life would look like. Your spouse and kids, if you have either, may not want you around so much. And if you’re single, silence may be rejuvenating for only so long.
Michael Kay, 67, is selling his shares of Financial Life Focus, a planning firm in Livingston, N.J. He doesn’t intend to stop working anytime soon, but many of his clients already have.
Some of them fail to reckon with how they will spend their time in a way that is still connected to something — and whom they will be connected to when they inevitably want some of that again. “If all my besties are still working, where do I find social interaction with peer groups when they are still working 9 to 5?” he said.
Only after the self-examination come the financial practicalities.
In an ideal world, you have savings that you can use without any restrictions or tax implications — or some kind of passive income, such as from a rental property. Perhaps there is equity in your home that you can extract, or an inheritance.
But if you don’t reside in a world of such privilege, there are workarounds. For instance, some people can draw on their 401(k) or 403(b) money without penalty as early as the year they turn 55. Public safety employees can do so starting at 50.
Did you start a Roth I.R.A. when it first came into being a couple of decades ago, and do you lack other savings to draw on? You can pull contributions (but not earnings) out tax- and penalty-free.
This is one of many good reasons to start a Roth if you are younger and hope to step out for a bit in a decade or two. And if you have access to a 457(b) workplace retirement savings plan, you can use the money when leaving a job, without penalties. (That said, you lose the benefit of compounding interest on that money once you withdraw it — so plan wisely and spend as frugally as possible.)
If you’ve come this far in your planning, you’re lucky. But it’s necessary to contemplate a few other ways that things could become financially complicated.
You could face the sudden need to provide care for an aging parent or a sick spouse, or assist with the personal or professional struggles of a young adult child. When that happens, you’re likely to hit a wall of uniquely American dysfunction.
“We don’t value care, we don’t compensate family members for care and we undercompensate professionals,” said Marci Alboher, vice president at Encore, a nonprofit that tries to bridge generational divides.
Also, there is no predicting economic cycles and other calamities. Imagine having planned to go back into the hospitality industry in the spring of 2020 — or nearly any job in early 2009, at the depths of the last financial crisis. Any money model for a short-term break has to include a what-if plan for a scenario where it takes you twice as long as you expected to begin making real money again.
Finally, a warning. If you opt out when you’re older — or even when you’re as young as your 40s — you may encounter age discrimination as you try to return to the workplace. In advertising, technology and plenty of other fields, the skepticism of you will be real. And if you’re a woman or a person of color, your age may only amplify those other biases.
While older people are a protected class for discrimination purposes, the diversity initiatives making a much-needed appearance rarely include people who are decades into their working years. If you’re fortunate, your age will only prompt arched eyebrows in your interview.
But there may be a growing appreciation for what older people can bring to a team, said Ms. Alboher, who is 55 and the author of “The Encore Career Handbook.”
“They have been around a lot of economic cycles,” she said. “And they’re not at a stage of life where they need to collect a diverse array of experiences. They often dig in and stay.”
Sell your experience like that if you must. Jeffrey Feder, 58, has been lucky enough to be able to. He left his accounting firm 10 years ago and started working gigs as a self-described “fractional” chief financial officer for hire.
It hasn’t all been smooth. When he could no longer find a good high-deductible health plan, he and his wife turned to a Christian health-sharing ministry. While these plans have been the subject of lawsuits, he and his wife’s costs were covered when she had a major health event last year.
Maintaining a home in Oconomowoc, Wis., and another in St. Augustine, Fla., was more of a burden than they had expected. The pair downsized to a condo up north and eventually sold that, too. Now, they have a rental apartment in Wisconsin so they can see family and keep an eye on aging parents.
By controlling their costs and receiving some passive income from investments in real estate where salon professionals can rent space to run their own businesses, Mr. Feder hasn’t had to take a job in a year.
The success of the couple’s decade-long plan was never guaranteed. But their happiness wasn’t either, if they had kept their lives the same.
“The pain of the status quo has to exceed the pain of change for you to take action,” he said. “I was done with the status quo, and we were willing to take the risk.”