The reality of the 40 or 50-year-old corporate executive is that things have changed. Your retirement isn’t what you expected. In fact the change has accelerated since the Global Financial Crisis. The roots however go back much farther.
Until the early 1980’s wage growth in the U.S. had grown at 2.2% for around 80 years. Then this trend stopped and became far more variable. What happened was globalization and outsourcing hit facing the factory or blue-collar worker.
This trend then continued until the recession in 2001. Then it became obvious that white-collar jobs could be outsourced in the “IT enabled” world in areas like telemarketing and bookkeeping. Any job with an Internet component became fair game.
As communication technology continued to rapidly make the world smaller, education also thrived. Global education standards were a direct beneficiary of the communication revolution. The OECD predicts the United States and European Union will only represent 25% of college-educated people by 2020.
What this implies is free flowing information to immediately (photo) copy best practices. What this means is that technologies and practices available only to large firms are now easily accessible by all. The table-stakes of a college education and a good/lucky geographic location no longer matter.
Whether it is globalization, technology or regulation doesn’t matter. The result is the economics have accelerated to a more level global playing field with much tighter margins and much higher competition.
For the corporate executive hoping for a good run to retirement the environment is changing very rapidly and not for the better.
I’ll Hold Out and Things will be Fine
This is a frustrating situation. This wasn’t the deal. It’s easy to look for things to blame.
Being a career executive in the latter third of a corporate career is now a very risky position. Younger and very qualified folks are able to rapidly move up the company ladder. They have often used exciting new technologies and never worked with the old ones. Youth deservedly has a halo.
Many would feel entitled to claim age discrimination. Whether real or implicit this also doesn’t matter when you get a package to leave. Most companies know all to well how to “manage out” folks they have targeted for whatever reason.
Old used to be the guy in his sixties! Now it’s anyone who is a step slow on a new system or concept. Your worst attribute may only be your gray(ing) hair. It is easy to be resentful.
That misses the point. The justness and fairness of this change are noble concepts, but only concepts. To bemoan the situation is wasted energy. This will likely take you backwards and not improve your lot.
The other gut reaction is to do nothing. Many people either are not observant or willfully ignorant. We have all seen these people in the workplace and they don’t see their routines ever changing and they are fine with that. They are fine until they are no longer needed. History doesn’t treat those who rest on their laurels well.
While any individual position make look secure there are certainly more risks. Granted that institutional knowledge is important and so are relationships. The problem is the corporate environment is much more prone to expense containment and pay increases are largely capped. The rebound to pre-GFC compensation levels never happened for many.
The whole plan of the 40 or 50-year-old corporate executive was to earn at a decent (higher) level for quite a while longer. This isn’t going to happen. This assumption is not realistic. And this was an integral part of the retirement plan.
In today’s world many folks are struggling to stay each flow positive. Saving for retirement just isn’t possible. They rightfully worry about the next economic hiccup and how it will affect them. Time is not on their side either
Any of the stories we tell ourselves is dangerous. Trends are in place that will likely accelerate, not go away. It’s far too easy to tell yourself you’ll be fine without a proper back up plan is irresponsible.
Use These Forces to Your Benefit
Today’s 40 or 50 year old senior corporate executive is in the perfect position to capitalize personally on the forces I have described. Relationships and the ability to work within a company are golden outside the building you work in. Two decades plus of serious corporate experience may feel like an anchor but it is really a huge differentiator.
Younger entrepreneurs have largely been boxed out of big company experience and suffer from a learning curve. Many younger workers also don’t know the lessons of the economic disruptions of the last two decades. Younger generations also fall far short in the ability to communicate in person. Business is still and will always be built on relationships, just maybe not the ones you have today.
These are all enormous advantages if you shift your mindset.
As opposed to total reliance on a corporate existence for both income and professional validation, become an entrepreneur on the side. Explore new ways to make money through areas that are of interest to you. Establish a persona outside of your corporate job and build that network.
Consulting with start up businesses could easily put you in a new (younger) circle of business friends. This could also leverage your skill set and open many new doors. The point is to do something today to diversify your income and intellectual reliance on your corporate career. Any steps taken today will ultimately bear fruit but you will need time to build momentum.
If you find yourself struggling with a new career reality, you need to think outside the box. If you have a negative cash flow you need to change some things fast. If you aren’t on a path for retirement you need to get on one. If you don’t have a plan you need to make one.
Your Retirement Plan Depends on This
- Reduce expenses radically
- Develop some alternative income sources
- Plan relentlessly for the outcome you want
This is a difficult time to be a senior corporate executive. The new reality is not a good one and the economy is late in an expansion. Holding a job is tough and advancing is tougher. This isn’t likely to change.
The really good news is there is a path to where you want to get to with your skill set and plan your retirement exactly how you need it to be.
Get the help you need, step-by step right here. Our No Nest Egg Retirement Plan course and community can help you downsize, retire abroad and make your savings last longer.
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Ian Bond is a private banking senior executive with over three decades of experience in wealth and asset management with Goldman Sachs, Credit Suisse, and Citigroup. He has built major businesses on four continents.
Despite his professional responsibility for assets over $100B and revenues over $1B, after the 2008 crash Ian was personally going broke. Within five years he destroyed his debt, became an expat in 2014, and built multiple streams of income to fund his imminent retirement. Ian is also the founder of MyRetirementRehab.me created to help other executives and professionals rehabilitate their finances and make a prosperous, enduring retirement a reality.