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This story originally appeared on MarketBeat
A friend of mine spent over 10 years in a career that didn't fit so well. She earned a meager salary, her bosses sighed every time it was time for performance reviews, and she got stuck in her role.
This in turn affected their income, which affected their retirement savings, which affected their long-term monetary goals. She now has a new role, happily working for a nonprofit and has been working on catching up on her retirement savings.
So how can "Know Yourself", ancient wisdom carved in the forecourt of the Temple of Apollo at Delphi, apply today?
It can have anything to do with investing, stocks, saving for retirement, and bagging money over the course of your life. Let's examine how choosing the right path for you will affect your retirement savings in the long term.
How choosing the right path will affect your retirement savings
You already know your job satisfaction and your earnings, in turn, depend on how well you do your job, how much your boss likes you, how well your co-workers appreciate you – a million reasons matter.
If you are not completely honest with yourself about your skills, or if you feel stuck in your current job, it could affect your retirement savings.
Reason 1: Your salary determines how much you save.
When you sign up for your employer's retirement plan, you can usually choose between a lump sum and a percentage of your salary.
If you choose to contribute a percentage of your salary, the amount you save should automatically increase as you start earning more. However, you may not save as much for retirement if you don't have a job that suits you.
Of course, some jobs pay less than others depending on the industry you choose. However, if you are not in the right industry, consider jumping into a new one. Your income and thus your retirement provision will increase.
Reason 2: performance assessments may not be successful.
Most employers base their salary decisions in part on individual performance. If you do not perform well, you cannot receive a wage increase. The performance has a significant influence on the payment and in particular on the performance remuneration. If you're in the wrong field, your performance reviews can have an impact on how much you make and how well you save over your years of employment.
Reason 3: You may feel reluctant to get professional associations and certifications.
You can get paid more as you achieve certifications and membership in professional organizations or associations. However, if you don't have a specific certification because you don't want to get it, you may have a salary that is on the lower end of the range. In other words, if you're not passionate about joining your industry association, you may be in the wrong career.
Some employers require employees to work towards them without certifications. You may be sabotaging your income and, with it, your retirement savings.
Reason 4: You have got stuck in your job.
Poor performance reviews can mean that you are not moving forward in the company. This, in turn, could mean that you could be sacrificing many percentage increases in retirement savings. For example, let's say you've been with a company for 10 years but have continued to take on an entry-level position. You may get minimal raises every year, but you can watch others get promoted over you. Start looking for a completely different profession!
Reason 5: Burnout is real.
Take stock of your work-life balance. Do you feel stressed and exhausted all the time? If so, you can face the dire consequences of job burnout. Any physical, emotional, or mental exhaustion from work can affect your performance and your long-term goals.
Fast pension calculation
Let's say you switch jobs to something that fulfills you and offers endless potential. Does this automatically mean that you can make a lot of money and easily cram your nest egg?
No! However, choosing the right subject and position could give you a more lucrative path forward and give you the right combination of job satisfaction and long-term success. Let's look at two different pension calculations using MarketBeat's pension calculator to show how moving to a different job over several years can make a difference.
Let's say you are 40 years old and plan to retire at 67. Let's say you've already saved $ 20,000 for retirement. Based on your current budget, your current salary will allow you to retire $ 200 a month. With an 8% return, you would make about $ 400,460 in 27 years – your target retirement age.
Now let's imagine you change jobs and find a much more appropriate career path for your needs. It comes with a higher salary and better benefits as a bonus. Let's leave the general factors the same: you are 40 years old and plan to retire at 67. You have already saved $ 20,000 for retirement. However, based on your new salary, you can add more to your retirement savings every month. Let's say you can save a lot more – $ 1,000 per month instead of $ 200. With an 8% return, your investment would be $ 1,313,565 in 27 years!
Learn more about the Rule of 72 and how it can affect your long-term investments over time.
Prepare for optimal retirement results
Are you honest with yourself about your current job and whether it makes sense for your personality, needs, happiness, etc.? Is it making you thrive? Knowing yourself well also means knowing when to throw in the towel when something stops working.
Here, too, the mere decision to change industry or job does not guarantee success. However, it is important to know the difference in whether you are experiencing the right kind of fulfillment in your job. This goes beyond the daily challenges that every job brings with it. For example, if you are faced with a lot more problems, such as intense Sunday anxiety or a tremendous amount of stress, you may need to change careers.
Also, keep in mind that people change over time. You're not the same person as you were in your twenties, so the entry-level sales job you had when you were 23 may not reflect the same values or interests that you had when you were 40.
Know yourself well enough to switch careers if necessary – your nest egg can flourish as a result.
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