Rarely a day goes by now that I don’t talk to someone seriously considering escaping the daily grind. Though the “Great Resignation” era is behind us, we can’t deny that something seems to have shifted. Professionals are looking at their career goals differently — no less ambitious but with a different vision of success. The constant pressure to perform and at a frenetic pace seems less rewarding to many. Even those who are well-compensated are wondering at what cost, as work-related stress and burnout reach all-time highs. 

If you’ve developed a sense of disillusionment with the corporate rat race, you might think it’s time to escape. But not so fast! It’s also important to ask yourself what the financial cost will be and what else you should consider. 

I understand that playing by the rules can feel like you have no other choice but to keep going at breakneck speed or get left behind — that if you don’t strive for more, you’ll end up with nothing. But you have other options. Instead of dropping out of the rat race, what if you decided to slow down instead?

Career downshifting or shifting gears in your career could be the alternative you’re seeking.

Earlier this year, I wrote about 3 Big Questions Mid-Career Professionals Should Ask Now when considering their financial future. While this article sparked interest in the “When can I stop working?” conversation, it also raised a new line of thinking: “Could I just slow down?”

Career Downshifting, Phased Retirement, and Other Alternatives

Many find the idea of continuing to work outside the confines of the typical corporate grind appealing. Instead of striving to make senior partner, reach the executive ranks, take on high-stakes projects, hit your next bonus, or stay at the top of your game, you might want to take on a role that is less intense and more aligned with work that makes you happy or energizes you. 

After 13 years on Wall Street, I shifted gears and moved upstate to create a different lifestyle for my family. Becoming a CERTIFIED FINANCIAL ADVISOR™ and founding my firm certainly was no early retirement or walk-in-the-park; business ownership comes with its own unique pressures. But working on my terms is something I wouldn’t trade, and I’d make the same choice again and again.

You might consider asking for reduced hours with your current employer, getting a part-time job, joining a smaller firm, stepping down from executive leadership at a mid-sized company into a director-level role at a larger corporation, starting a consulting practice, or offering fractional services (e.g., fractional CFO or CMO). The possibilities are out there. 

Increasingly, employers are recognizing the value of supporting later career professionals who want to downshift for various reasons, such as better work-life balance or reduced stress. Age-inclusive initiatives and strategies are being developed to help employees ease into the next phase in their lives and transition into lower-stress or part-time roles, more flexible work arrangements, alternative career paths, and phased retirement programs. 

Preparing to Shift Gears and Slow Down

Before downshifting your career or making another major change in pursuit of less stress, you’ll want to look at the big picture and carefully consider your circumstances. Studies showed that most people who quit their jobs during “The Great Resignation” had regrets. Although GenZ workers were most affected by making hasty decisions, it’s not uncommon for Boomers and GenX to regret early retirement or downshifting. 

Here are some questions to ask yourself if you are considering such a change:

• What dollar amount do you need to live off of to maintain your lifestyle? Can you comfortably manage income changes?
• Do you have an idea in mind of what you could do if you left your current job? Have you considered alternative income sources or part-time work opportunities? Does your employer offer phased retirement or alternative career paths?
• Are there financial milestones or goals you still hope to achieve after downshifting?
• Can you cut costs by moving to a lower-cost-of-living area or downsizing your home?
• Do you have a clear picture of how downshifting might affect your retirement savings, pension, or other retirement benefits?
• What are your plans regarding healthcare coverage and other typical employee benefits during your downshifted career?
• Have you consulted with a tax advisor to understand the tax implications of downshifting, especially regarding retirement accounts and income taxes?

The key is determining how to adjust your financial plan to support your downshifting goals while maintaining financial security and stability.

Downshifting May be Possible Sooner Than You Think

Unlike retirement, where you have to be able to fully support yourself without earning more money, downshifting allows you to continue to earn an income. Downshifting may only require you to break even from a cash flow perspective if you have been accumulating assets and preparing for full retirement. 

Something that has come to light for some of our clients is that they may have already saved enough, as long as they can get a job that allows them to break even. In other words, the size of their investment assets — if left untouched, with another 40-50 years to grow — is sufficient to maintain the lifestyle they desire through our set target of age 95. 

People still in their 40s may be surprised at how powerful compounding is. With minimal income sufficient to cover expenses, growth can be enough to live the life you want when you stop working for good. By cutting savings and investing out of your budget, the amount you need to earn drops dramatically. 

Is Downshifting the Future of Retirement?

It can be argued that downshifting comes with less risk and more rewards than full retirement. Prolonged exposure to stress negatively affects your health. Burning the candle at both ends during your early career isn’t ideal healthwise but could potentially pay off exponentially, financially. However, continuing to push and grind well into your later working years is probably more likely to backfire. 

Full retirement has been known to lead to isolation, loneliness, and a sensed loss of purpose, especially among driven, ambitious people. Downshifting or phased retirement, on the other hand, supports maintaining social ties, an active routine, and a continued sense of meaning and fulfillment. Knowing you’re still needed and expected to show up and contribute but without the pressures of a high-demand career strikes a nice balance.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network. They can be reached by phone at the Corning, NY office at (607) 438-2914, Ithaca, NY office at (607) 463-8400, or Portland, OR office at (607) 292-2172 or at the firm’s website at https://lakeroadadvisors.com/

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.