Earning More Retirement

How to Change Jobs In Your 40s, 50s and 60s

Written by Rebecca Lake

On average, the typical worker holds roughly 12 different jobs over the course of their career, according to the Bureau of Labor Statistics. Among millennials, job-hopping has become par for the course, with 60 percent of young adults saying they’d be open to a new career opportunity.

Changing jobs in your 20s or 30s may not be that big of a deal but it’s a different story when you’re at a later stage in life. Switching to a new role when you’re heading into the home stretch before you retire can be tricky. Keeping your financial goals in sight and having a plan for starting a new gig can make the transition easier and less taxing on your bottom line.

Decide what you’ll do with your old retirement plan

If you’ve been saving steadily in a 401(k) plan or another employer-sponsored option, the first thing you need to consider is what’s going to happen to that money if you’re moving on to a different company. You’ve got three basic options to choose from: cash it out, roll it over into a new qualified plan or leave it where it is.

Cashing out a 401(k) might cross your mind if you don’t have a lot saved in your plan or you need some money to bolster your savings while you’re getting started in your new job. Pocketing that money, however, can come at a steep price. Generally, if you cash out a 401(k) before age 59 ½, you’ll have to pay a 10 percent early withdrawal penalty on the money.

There’s an exception if you take an early withdrawal but you’re at least 55. In that case, you could avoid the 10 percent penalty. Regardless of whether you get stuck paying the penalty or not, you’d still have to pay ordinary income tax on the distribution. If you’re in a higher tax bracket, pulling money out your 401(k) ahead of schedule could get expensive.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website, RebeccaLake.net.

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