Many older workers dream of starting a second career, doing something in a field that is personally meaningful to them. But making the transition to an encore career can be hard and expensive, especially in today’s economy.
Encore careers offer personal satisfaction
A new study from Civic Ventures and the MetLife Foundation called “Bridging the Gap: Making it Easier to Finance Encore Transitions,” polled 930 American workers, aged 44 to 70, by telephone. Another 1,808 responded to online surveys.
Jim Emerman, executive vice president of Civic Ventures, said:
“People are living much longer, and they are healthier, and so they want to stay engaged. People need and want and are able to work longer. If people are out of work now or worried about their current job, the idea of a next career that combines continued financial security with personal satisfaction and something that they are passionate about is very strong.”
Many can’t afford the transition
The findings indicated, however, that many workers between the ages of 44 and 70 who want to switch to a second careers are simply not financially secure enough to make the transition.
Surviving a loss of income
The study also found that, of the approximately 9 million Americans who have transitioned to second, more meaningful careers, most took substantial pay cuts or earned nothing at all during the transition period. On average, those Americans were about age 50 when they started contemplating switching fields. More than half of those surveyed — 57 percent — said that they had to get into their savings before the encore career became self-sustaining.
Among those who had a period of no income, nearly 80 percent said they had to sustain themselves for six months or more. Another 36 percent cited a gap of two years or more.
Twenty-three percent of those surveyed prepared for their encore careers by enrolling in volunteer programs in their field of choice. Another 13 percent did volunteer work at a church or temple. An additional 20 percent took educational courses.
‘A big payoff’
Marc Freedman, founder of Civic Ventures and author of “The Big Shift: Navigating the New Stage Beyond Midlife,” said:
“There’s a big payoff from encore careers, for individuals and for our entire society. But making the switch is hard. Employers, policymakers and all of us in our own lives need to think creatively about how to make the investments in encore transitions that lead to these new, more fulfilling careers.”
Bridging the financial gap
The financial gap remains the largest hurdle. Those with significant investments, assets or savings will obviously have an easier time of it. But there are other options.
David Bank, a vice president with Civic Ventures, said that those who want to transition to a more meaningful career late in their professional lives need to embrace different financial strategies to make that happen. One such strategy is an educational savings plan, such as a 529 college savings account. An annuity that supplements a part-time job until social security age is reached is another option. Naturally, MetLife offers such an annuity, called a Guaranteed Future Income Annuity, but other financial services providers offer similar instruments.