Click below to listen to Episode 70 – Mid Career Risk

Mid Career Risk

Learn about mid career risk and the impact that it can have on your retirement.

What happens when you are looking at a possible job loss as you are nearing retirement? That’s the question we tackle on this episode about mid career risk and its impact on retirement planning. It may be happening to you, or someone you know, at this very moment. It’s yet another example of how we have to hope for the best and plan for the worst.

Bob and Mary Jo have friends and clients that this has already happened to, causing concern about their future and employment outlook. Age discrimination can be a real concern. The older you are when you get laid off, then the longer it takes for you to find a comparable position. The higher your salary, then the longer it takes to come anywhere near replacing your income.

Could you be next?

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

Mentioned In This Episode

Christian Financial Advisors
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Bob Barber, CWS®, CKA®
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Mary Jo Lyons, CFP®, CKA®

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EPISODE TRANSCRIPT

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Bob:
Jeremiah 29:11-13, “For I know the plans I have for you, says the Lord. They are plans for good and not for disaster, to give you a future and a hope. In those days when you pray, I will listen. If you look for me wholeheartedly, you will find me.” So the scripture today really has to do with that God has a bright future for us all. But in today’s podcast, we’re going to be talking about mid career risk and the possible impact it could have on your longterm planning and how to prepare for it. And you know this topic, while it’s not fun to talk about, it could impact you or someone you know and care about. We know from experience that this has impacted many people in their 50’s, including several clients and close friends of ours. We also know others that are concerned it may happen to them in the near future. So here’s the question for today’s podcast. Could you be at risk of being let go from your company you work for because you’re in your 50s and are you prepared if this happened to you?

Mary Jo:
It’s just with such a heavy heart that I came up with this idea for the podcast. My husband and I, we have some very great friends who are looking at possible layoffs for both of them, both spouses, and they work in different firms, but in the same industry. It’s coming at a time when they’re looking at ramping up for their retirement savings. You know, they’ve been through this before, unfortunately. So they spent some time out of the workforce. So they’re making up for lost time. And luckily, they’ve managed to hang on so far and we’re praying that they’ll be able to make an exit plan of their choosing instead of somebody else choosing that for them, such as the company. But it’s a scary time for them. It’s yet another example of how we have to hope for the best, but plan for the worst. And you know, the other thing that’s hard to kind of give voice to is that they’re at that age when age discrimination is a real concern. The older you are when you get laid off, the longer it takes for you to find a comparable position. And the higher your salary, the longer it takes to come anywhere near replacing your income.

Bob:
And it’s interesting, Mary Jo, you’re always good about coming up with these topics. And then it’s interesting how after you come up with these topics, I hear – and just yesterday we had a few people, two different people give us a call about they’re being laid off, and they’re in their mid fifties. So, this is the real deal. And all of a sudden you made this more top of mind awareness, and it is. I mean, I hear it all the time and this makes me think about our own industry. You remember back in November when Charles Schwab and TD Ameritrade who we clear our accounts through, they announced recently they’re going to be merging later this year. And building up to this, some of their employees have already experienced what they call “job consolidation”, which is elimination as they restructure. And I looked on Charles Schwab’s website and in their own words, they stated that the majority of positions that are going to be “overlapping and duplicative roles”, I’m trying to say that well, it’s right straight from their website, “within the two companies will be eliminated.” And you think about that, that’s a lot of jobs because TD Ameritrade and Charles Schwab as stand alone has thousands – they have supplied thousands of jobs, and now they’re going to be joining. I don’t know how many it’s going to be in job layoffs, but I have a feeling there’s going to be a lot.

Mary Jo:
Well, and it’s not just isolated in one city, you know, they each have multiple call centers in different cities across the country. And branches are all across the country as well. So it won’t be just jobs that are in Denver for example. It will be widespread. And they’re just one example of where this is happening. You know, there are many other firms that are experiencing consolidation and restructuring in order to compete in a changing economy and address changing customer demands. And you know, it’s not just happening in financial services but also retail. Just think about the number of retailers that have gone out of business in the last few years as online shopping is replacing retail stores.

Bob:
I gotta admit I’m guilty of that because we’re doing most of our shopping online now.

Mary Jo:
We do the same. But you know, the one company I thought was doing well, Bed Bath and Beyond, the other day, they are going to shut quite a few stores. So none of them are immune to it. And we’re at that point in our economic cycle where we have uneven economic growth. So there are certain industries that are doing really well, certain geographic areas that are also seeing booms such as those in Silicon Valley and the tech states like California. And there are states like Texas that are benefiting from the oil and gas industry. And look at the state of Florida, they are experiencing this huge growth due to lower overall tax rates, and people are just flocking there. So, I imagine all the service industry, all the jobs that’s creating, but there are other industries and other areas of the country that are seeing economic slow downs. So booms in one area, slow downs in another. And so the is is your industry struggling? Have the tides turn in another direction? So what happens when you’re looking at a possible job loss as you’re nearing retirement? That’s the question for today’s podcast. Could you be next?

Bob:
The US unemployment, we all look at it and looks great cause it fell to a 50 year low to 3.5% according to the Bureau of Labor’s statistics. That tells us that more people are actually working than we’ve seen in a long time. And that’s great news, and it does show how strong our economy is, but the job landscape is changing because as technology continues to change and companies become more efficient, it’s very natural for them to shed those higher paying jobs that are usually with people in their 50s. They’re older and the corporations believe these same jobs can be done for a lot less by younger generations. And in theory, it gives the company more longevity. But you think about it, it creates a brain drain on that company because these older people in their 50s that have been around, they have wisdom and it could have a negative impact.

Mary Jo:
Absolutely. According to a study published last year by Pro Publica and the Urban Institute. That’s somebody we listen to every day, isn’t it? I’m not sure who they are, but they did this study.

Bob:
That’s the internet. You can find this stuff out there.

Mary Jo:
The older US workers are pushed out of longtime jobs before they choose to retire, suffering financial damage that is often irreversible. So let’s assume for a minute, you’re in your late fifties and you’ve given the best years of your life to a major corporation, or you’re a small business owner and your business is finding it hard to compete in a rapidly changing marketplace.

Bob:
Now, if you’re not in your mid fifties, you can still continue to listen to this podcast because you may know somebody that’s there. It may apply to you even if you’re in your forties. It may still apply to you. So you can still find yourself at risk of being forced into early retirement before you’re financially ready. Because if your company is consolidating with another company, like we mentioned earlier, you know, TD Ameritrade and Charles Schwab, or your company’s thinking about it in its own future, say 10 to 15 years. So, for someone in their 50s, it’s a loss, but for the company, it’s a win since they can pay less for that same position and assure that someone can serve in that position for possibly much longer than you can. So many corporations, they’re making that decision now instead of later to let go of their people in their mid fifties. Plus, many corporations are having to downsize, reorganize, or merge with like minded companies today to stay afloat because the landscape is getting so competitive with this rapidly changing technology. It’s just amazing. And you know what, those that are self employed or own small businesses, they could have similar risks to deal with as well. I’m really watching as our company, you know, we’re a small employer. We’re watching this technology and as I hear of all these robo advisors that are coming out and doing it for basically free. I’m like, okay, wait a second. You can’t do everything for free. But it is amazing what is happening just in our own industry.

Mary Jo:
You know, the pace of change, it’s constant. That’s been a truth for many years, many generations, but it’s an incredible pace these days.

Bob:
It seems like it’s happening faster.

Mary Jo:
Yeah, I think so.

Bob:
Yeah, definitely.

Mary Jo:
In August of 2019, the Bureau of Labor statistics indicated that the average length of unemployment is 22.1 weeks and 20.6 of the unemployed are out of work for 27 weeks or more. So that really is just about six months.

Bob:
And the longer you’re unemployed, the worse it gets, right?

Mary Jo:
That’s absolutely true. It’s much easier to look for a job when you have a job. So, that should be a good starting place should the unthinkable happen in 2020 and a layoff or a recession is on the horizon. It is an election year and I think we could all agree that the United States is a divided country, and anything could happen. Before we get into some of the ideas on how to prepare for this if there’s such an event, we want to start off with some good reminders. Remember that good people can get caught in mergers and layoffs. Sometimes, there’s just nothing you can do to avoid it. Don’t take it personally, although I know it feels personal at the time. Remember, none of us know what the future holds. Only God does. So stay positive, be optimistic, and be that person that the glass is half full. We all want to be that half full person instead of the glass is half empty. And most importantly, walk in faith and keep an eternal perspective and start to prepare.

Bob:
This reminds me of a great scripture, too, from Philippians4:6-7. It says, “Don’t worry about anything. Instead pray about it. Tell God what you need and thank him for all he does. Then you will experience God’s peace which exceeds anything we can understand. His peace will guard your hearts and minds as you live in Christ Jesus.” That’s a great scripture.

Mary Jo:
It’s my favorite, Bob.

Bob:
Keep that in mind because worrying doesn’t add anything, but being prepared does. So here’s some great ideas on how to prepare for that possible layoff regardless of what age you are, should it happen to you or someone you know. First thing that we always emphasize is get your resume ready and updated just in case. Focus on key words in that resume that can be picked up with scanning software today because that’s where technology comes into play, and get fresh eyes to look at that. Keep a keen eye for typos, spelling, and grammar mistakes, but you want to keep this confidential. Keep that very confidential because you’re still in your regular job, but always have it ready to go.

Mary Jo:
Just a reminder, spellcheck isn’t always your friend, and make sure you pay close attention to word choices. If you mean their with a T-H-E-I-R, don’t type T-H-E-R-E because spellcheck isn’t going to pick that up.

Bob:
Oh man. With my clumsy thumbs and texting, I’m always having to send another text. I go, wait, I didn’t mean to say that because spell checker caught it.

Mary Jo:
So just be careful. And the next idea is to build your network. Even if you’re not a social media user, you want to join LinkedIn if you’re not already active there. So you want to maintain an active LinkedIn profile. Maintain relationships with the colleagues and associates. Share articles and information that could be helpful to those in your network, comment on their post or other professionals in your network. You also want to diversify your network. You don’t want to just look at those that are like you. If you’re older, look for younger professionals to connect with. It could present a fresh perspective. Look for that rising star with an “in” at a new company. If you’re younger, look for more senior associates who can speak from experience, who have wisdom to share.

Bob:
I’ll tell you, I love LinkedIn and it’s got so much good information on it and I go to it nearly daily just to see what another business person has posted, and I learned a lot from it.

Mary Jo:
Absolutely. I get a lot of great articles and timely wisdom about the industry, and it’s extremely helpful.

Bob:
So some other things that we thought about being prepared is attend industry events, workshops, and conferences when possible. Expand your skill sets where possible. Attend additional training that can become available to you. Refresh those credentials that you have. Get new certificates. I mean, this is keeping you on the edge, you know, the cutting edge of being high tech and ready to go. Join a career association. Stay current by reading the best selling, most popular professional books and publications.

Mary Jo:
Improve your interviewing skills. Consider working with an executive coach, but make sure that they are worth their weight. Now these days, there’s lots of life coaches. That’s not what I’m talking about, and they’re out there, but they have no real significant professional experience. So if you’re considering this, make sure you’re finding one with the creds to support it.

Bob:
I agree with you there. Definitely. And next, be mindful while still working in your current job. You know, don’t get caught up in the day to day chores at work that you don’t think strategically anymore. Do you have a noncompete agreement with your company? Then you need to understand what it says.

Mary Jo:
Begin to document your successes if you’re not already doing this, your contributions and your goals, as well as any unexpected events or feedback you receive. So, keep a reference file and begin to take notes because you know I can pretty well bet they’re taking notes. Work to strengthen and improve your relationship with your direct boss. Raise your profile with other leaders in the organization. Become more visible.

Bob:
Man, I think about all these. This really makes you a good employee. Maybe they won’t let you go.

Mary Jo:
That’s the idea.

Bob:
Take steps to go above and beyond whenever possible. Build a list of professional contacts on your personal database that can help you and you can help them.

Mary Jo:
Get copies of all your personal documents such as appraisals and annual reviews, your pension benefits, examples of work products that you’ve created, and your work samples. Make sure it doesn’t include any proprietary company information and that you’re not taking what belongs to the company, but if it’s your products, you kind of want to make sure that you are keeping an example. You’ve got to build a portfolio for yourself.

Bob:
Now as we go over this list for preparedness, Mary Jo, I just wanted to say in the middle here, this will be on our podcast website so people can go find it.

Mary Jo:
Oh, absolutely. Good idea, Bob. And be thoughtful about future roles and promotion opportunities. In a lot of industries, this is really important. The further you get away from the end client, the more your job is at risk. You think you want to become that regional vice president, but you might be much better off on the front line, and I’ve seen that happen many times.

Bob:
Just a little bit different subject now, but it’s still under preparedness for that possible job loss is get your own financial house in order. Understand all those employee benefits. Like if you have a health savings account, understand the rules, how you can fund them, how you can use them, and know which benefits can go with you and which ones can’t. Like life insurance, many times, can’t go with you or longterm care or disability insurance.

Mary Jo:
We call that portability. Also, consider obtaining portable personal life insurance if you have a life insurance need. Now remember the older you get, the harder it is to get life insurance because you might have potential health issues. So when you’re younger, having a portable personal policy, it can also be more cost effective than what an employer provides. So that’s something you should look into. Refinance your mortgage and other loans if rates are lower while you’re still employed. It’ll always be easier at that point.

Bob:
Yeah, you got it. It’s always easier because you can show that current income and steady employment if you’re thinking about refinancing. So definitely do that. If you think a possible job loss is coming up, build up your emergency fund. We have had entire podcasts on this, and you want to strive for at least six months, if not more. In some examples, a year and a half. And you know, if you look at some examples in scriptures, I’m going to go over one of those later in today as we end the podcast. So, you’ll want to hear that. I got a really good example. You might want to temporarily stop contributing to your retirement savings, if needed, to build up that emergency fund.

Mary Jo:
You know, we don’t like to encourage that, but you’ve got to pay yourself first and make sure you’re prepared. Now may be the time to do that financial plan you’ve been considering. So if that’s been weighing on your mind, get with it. Reduce your financial footprint where possible, like that boat payment or the second home if you’re not really using it. You might want to unwind any concentrated company stock positions. Begin to think about diversifying away from the company and the industry where you feel you could be at risk. Your paycheck comes from them. Your 401k is funded by them. You’ve got company stock. You know, all your financial wherewithal is tied to that company in that industry. So, now’s the time to diversify. And if risk is imminent, consider dropping unnecessary expenses. Take any unused paid time off that you’re at risk of losing. Get contact information from payroll, human resources, and references that you may want to keep. Sell what you don’t need while there’s a market for it. Avoid media and sensational news sources. They can send you on an emotional and negative spiral. So, ignore the news. Get caught up on all your annual medical exams like your pending dental work or you may be needing checkups. You might need new glasses. Now’s the time to start thinking about those things.

Bob:
Mary Jo, I don’t know if we’ve ever had this many good points in a podcast.

Mary Jo:
Oh, come on Bob. We’ve done some good ones.

Bob:
I know we have, but it’s just amazing. As I’m looking through this, and I just want to say again, there’s so many points that we’re going over and they’re so full of wisdom that if you’re like, man, I’m hearing all these points but I can’t hardly keep up with y’all. Again, all this is going to be on our website so you can look at some of these points and get your financial house in order. Another one is building your community. Get active in your community if you’re not already. A lot of job leads, many times, they come from people you already know. Stay involved and engaged in your church community. Be in prayer. Continue to tithe. Ask for prayer so others can help you, and ask if anyone knows anyone that’s in your field that may be hiring, but keep it confidential, like we said before, until your company lets you go.

Mary Jo:
If a layoff occurs, a couple things you want to keep in mind. Confirm payment is received for all of the accrued benefits that are due you like unused vacation. Research unemployment benefits such as Cobra. Negotiate a severance package if possible.

Bob:
Don’t burn any bridges. Remember the six degrees of separation. Now what this means is the six degrees of separation is the idea that all people are six or fewer social connections away from each other. It’s often called six handshakes rule. As a result, a chain of a friend of a friend statements can be made to connect any two people in a maximum of six steps.

Mary Jo:
I have seen that play out many times. It is a small world when you think about it. How many times do you run into somebody that you know at the most bizarre places or they know somebody you know? So be careful. Don’t burn any bridges. I think that’s a great one. And you know, woulda, coulda, shoulda – don’t second guess yourself. Remember, you are not defined by your job, and know that you are not alone.

Bob:
Really, no one truly knows what the future holds, but all of us can choose or not to choose to be wise and plan for the worst, but live for the best. And this is the kind of wisdom that is found throughout God’s word about getting prepared during the good times or the bad times. Now, I want to mention this story many of you know about in Genesis 41 that talks about preparing during the good times. Here it is. Pharaoh had this dream, and he kept having it in a different way. He couldn’t figure out what this dream was trying to say to him, and he had a cupbearer. If you remember back then, the cupbearer was the guy that drank everything before the King to make sure that it was not poisoned. I guess if the cupbearer fell off, the King said, okay, I’m not eating that or drinking that.

Bob:
So this cupbearer remembered when he was in prison this guy named Joseph, and Joseph interpreted some dreams and the cupbearer told Pharaoh. He said, Pharaoh, I’ve got a guy that can interpret your dreams. So he got Joseph out of jail, and Joseph interpreted the dream and Pharaoh was having a dream of six fat calves or cows, six fat cows, and six lean cows and the lean cows were eating the fat cows. Joseph interpreted this dream as saying, what’s going to happen is is the lean years are going to eat up the good years. So you’re going to have seven good years and then seven bad years. Take a fifth of the harvest. Now there’s a mathematical formula here. What is a fifth? It’s 20%. So, take 20% of the harvest for seven years and put that aside. Now Mary Jo, you think about that. That’s nearly one and a half years of reserves, right? Cause you’ve got, you know, 0.20 times seven is 1.4. So, that story gives us an example of during the good times of how much we should store up for the bad times. Because Egypt did that and the Pharaoh followed Joseph’s advice with the interpretation of the dream, Egypt was able to get through those bad years. Scripture also said there’s a time for everything. We’re going to have good times and we’re going to have bad times. But many times during the booms, we forget that the bad times can come about. Be prepared.

Mary Jo:
That’s such a great scripture, Bob and I remembered why I had just heard it recently. I’ve been reading the Bible through the year, trying to get through it in one year. The book of Genesis is always first, so I had just read through that. It’s great scripture. Thanks for sharing that one. And remember God works for the good of those who love him. And if it’s not good, Jesus is not done. If you’d like help getting your financial life in order, give us a call at 830-609-6986 or visit us on the web at ciswealth.com. That’s all for today.

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now.

[DISCLOSURES]

Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.