Changing Careers, Not Confidence: Financial Planning for Your Next Move

Career changes can cause a mix of opposing emotions–from anticipation and anxiety to excitement and concern to relief and uncertainty. Regardless of whether a transition is planned or unplanned, change is an opportunity to reset and reimagine your life, to reevaluate goals and reestablish priorities, and reformulate your financial plan.

The Three Transition Stages

Whether planned or unplanned, a career transition introduces complexity that didn’t previously exist, and with complexity can come confusion and indecision. But viewing the shift as three distinct phases, each with its own goals, can bring definition and clarity to the process.

1. Before the Move: Build Your Financial Runway

This is the time to prepare. If you’re considering a role change that could result in reduced income or your current situation feels uncertain or unstable, start building a runway to provide flexibility and peace of mind.

• Assess your current cash flow. What’s coming in and what’s going out?
• Review your monthly expenses and calculate how much is needed to maintain your current life.
• Identify non-essential expenses that could be eliminated if needed.
• Ensure your savings can cover a minimum of six months of expenses.

• Stress-test your plan against potential what-ifs. Does it hold up if your next role pays less? How would losing healthcare impact you? How long can your savings last without a paycheck?

2. During the Transition: Stay Grounded and Strategic

This is typically the time of highest anxiety and uncertainty. In the midst of transitioning between roles, you may endure periods of lost or reduced income. Sometimes it’s a brief expected gap between an end date and a start date; other times, the gap is open-ended.

During this phase, your runway should bridge any gaps and limit disruption to your life. This is the time to be thoughtful with reserves and strategic with spending.

• Apply any severance to your runway plan, but be aware that sizable lump payments can temporarily bump you into a higher tax bracket.
• Manage liquidity to ensure access to money without incurring early withdrawal penalties or capital gains taxes. Pull from savings first and retirement plans as a last resort.
• Adjust your spending to align with your new financial reality. Limiting or eliminating unnecessary expenses can help lengthen your runway.

• Avoid reactive financial decisions. Stay grounded and clear-eyed. While this is not the time to splurge or reward yourself with purchases, don’t overreact and abandon your financial plan entirely.

3. After the Transition: Recalibrate and Optimize

Once you’ve started a new role, it’s time to recalibrate, realign, and rebuild. Your new role may include a different salary and benefits, and career changes often come with a fresh perspective on priorities and goals. All of these should be incorporated into a refined long-term strategy.

• As reliable income begins to come in again, replenish savings spent during the transition and rebuild your runway.
• If it’s offered and you're eligible, enroll in your new company’s retirement plan. If your budget allows, catch up on missed contributions.
• Roll over any company-sponsored retirement plan from your former job.
• Align new income, benefits, and goals with a refreshed long-term financial strategy.

The Impact of a Values-Based Transition Specialist

Career changes pose meaningful questions and challenges that span personal, professional, and financial issues, making these transitional phases a good opportunity to reassess what matters most and revisit your financial plan to ensure it supports who you are now and the future life you desire.

Values-based planning ensures that the plan goes beyond numbers alone, starting with who you are and what’s important to you, and building the strategy around that foundation. As you reinvent yourself in and outside of your career, your personalized plan should support your new path. A values-based approach can be amplified by working with Certified Financial Transitionists (CeFT®), who bring specialized expertise and transition-specific guidance to designing strategies that offer clarity and confidence during periods of change and uncertainty.

Plan Now for the Change That’s Coming

Confidence comes from preparation, not predictability, and being proactive is always the best plan. Before making your next move, seek guidance from a partner that specializes in transitions and can offer a holistic plan on cash flow, retirement planning, and long-term alignment.

For most of us, a career change or disruption is inevitable. No matter the circumstances, that transition is an opportunity. Working with an advisor now will help you lay the necessary groundwork should an unexpected change occur.

Planning a career change? Map out your next move with confidence. Connect with AMG Wealth Advisors to build a strategy that supports both your lifestyle today & your long-term goals.