What to Know About Starting a New Career at 40

Andrew Weber is a senior director of Planning Philosophy, Research and Guidance at Northwestern Mutual. 

Being stuck in an unfulfilling job can be draining at any age, but it’s never too late to switch things up. In fact, the average career changer is 39 years old, according to a survey by Indeed. But making a professional pivot at this stage of the game isn’t always easy—especially if you’ve been out of the job market for a while. Here are some important things to keep in mind when making a career change at 40. 

Why do people change careers at 40? 

There are lots of reasons to seek a midlife career change, including:  

• Wanting a job that pays more. 

• Feeling a lack of fulfillment in your current role. 

• Wanting to transition to remote work or a flexible work arrangement.  

• Craving a better work-life balance. 

• Having more time because children are older. 

• Adapting to industry changes.  

• Wanting more opportunities for advancement. 

• Needing better (or different) employee benefits. 

What should I consider before changing jobs? 

Your gut may be telling you, “I need a new job!” But it’s smart to pause and prepare. You’ll want to get all your financial ducks in a row before making a move. Begin by reviewing any benefits that are tied to your employer. That may include retirement plans, health insurance, life insurance, flexible spending accounts (FSAs) and stock options. Leaving your employer might require you to forfeit these perks, so it’s wise to have a plan for how you’ll handle everything before you switch careers. 

Decide what you’ll do about insurance 

This is an important consideration, especially if you’re anticipating a gap in coverage. Look at all of your coverage, including:  

• Health insurance: You might choose to purchase temporary COBRA health benefits or enroll in a new health plan through HealthCare.gov. 

• Disability income insurance: Connect with your financial advisor to make sure you’re adequately covered if you’re not able to work for a while due to illness or injury.  

• Life insurance: This benefit is often tied to an employer, and not all employer-sponsored policies offer the coverage you need. Your financial advisor can help you find the coverage amount and type of policy that best fits your needs.  

Decide how you’ll save for retirement 

If you have a 401(k), you can roll it over into an individual retirement account (IRA) or new 401(k) with your next employer. If your new career doesn’t offer a retirement plan, look into a traditional IRA or other savings options.

Time your career change wisely 

In certain situations, sticking with your current employer for a little longer may be worth it to avoid losing out on money baked into your compensation package. You might consider this if: 

• You’re coming up on an annual bonus. 

• You’ve got a 401(k) match coming your way. 

• You’re about to vest in your retirement plan. 

• You want to exercise stock options but must wait to do so. 

Recover any money your company might owe you 

Before you start job hunting, be sure to: 

• Clarify whether your employer will compensate you for unused vacation time. 

• File a claim for any outstanding FSA expenses. 

• Stay current with expense reports. 

• Redeem or transfer any rewards you’ve accumulated on a corporate credit card. 

What do I need to know about interviewing? 

If you’re feeling good about making a career change at 40, it’s probably time to amp up on networking, update your résumé and begin your job search. Add these tasks to your to-do list: 

• Set your salary requirements: Research the average pay in your area for your desired position—and don’t be afraid to negotiate your new salary. Even if you’re new to the field, you may have experience and transferrable skills that make you an attractive candidate. 

• Look out for interview red flags: You may want to pass if an interviewer dodges your questions or lacks enthusiasm, or if the company mission or culture doesn’t align with your values. 

I landed a new job! Now what? 

If all goes well, you’ll start a new career at 40 that’s better than what you had before. The following steps can help your change go well: 

• Make a new budget: Your new job may offer a better salary. Update your budget and make a plan for any surplus income. That might mean increasing your retirement contributions or saving more for other financial goals like buying a home or paying down debt. If your new career requires a pay cut, make sure your budget is ready to handle it.  

• Understand how bonuses are taxed: If you get a signing bonus, that money will be taxed as ordinary income. Your employer might withhold taxes by applying a flat 22 percent tax rate or by adding your bonus to your regular base pay. If they choose the second option, they’ll withhold more throughout the year based on that higher amount. 

Making a career change at 40 can feel intimidating, but it’s definitely possible—and it may be worth it if it leads to a more satisfying position. Working with the right financial advisor is an important part of the journey. Your Northwestern Mutual financial advisor can help you change careers while keeping your short- and long-term goals in view.