In my most recent article, Retirement planning and whole-of-life planning, I referred to various uncertainties relating to retirement planning. These include financial risks, government policy risks, longevity risks, and health risks.
I also referred to career risk. I think this is important enough to reiterate.
Retirement is often a euphemism for being displaced from the workforce.
This is an enormous risk, not just from a financial perspective. Involuntary unemployment is one of the few things that has an enduring negative effect on life satisfaction - it can actually reduce our set-point for happiness, which in most cases is very difficult to change. Being unable to work when you want to work can make you question your value to the world, and it can mean that your opportunities for socialising, contributing, and being engaged and challenged are limited.
If your long-term financial and lifestyle outcomes rely on your ability to generate an income, then being out of work for a period of time will mean you'll end up in a worse position than you would be. If you intend to work after the age of 65 but don't have marketable skills (that offset any general prejudice against older workers), you may not be able to find work to supplement NZ super and the savings you've accumulated.
I'm not offering any silver bullets in relation to this risk. Careers are generally built slowly and painstakingly. It can take a long time to work out what sort of work you like and what type of work likes you. Everyone's situation is also unique, so one-size-fits-all solutions rarely work.
The most valuable thing I can do for most people is to point this out. By being aware of this risk, you can be in a better position to work out how best to manage it.
However, one of the best pieces of career advice I've come across is Scott Adam's suggestion to develop a "talent stack". In his book How to Fail at Almost Everything and Still Win Big, he prescribes a "Success Formula": "Every skill you acquire doubles your odds of success".
Notice I didn't say anything about the level of proficiency you need to achieve for each skill. I didn't mention anything about excellence or being world-class. The idea is that you can raise your market value by being merely good - not extraordinarily - at more than one skill.
He later points out that "Successwise, you're better off being good at two complementary skills than being excellent at one".
I think Adams exaggerates, because to distinguish yourself from others you often have to be excellent at one or more things at least. But there is truth to his general point.
One way I think about skills is about depth and width. You can go deep with skills, and you can go wide with a lot of skills. As a general rule, the wider you can get - and better you can demonstrate your proficiency in these various areas - the better. You still need to go deep in places. But the wider and deeper you go, the more leverage and career capital you will have.
This works from the perspective of minimising risks, because it makes you more broadly employable or valuable to prospective clients. It also works in terms of exposing you to the upside, because the more complementary skills you have, the more you distinguish yourself from the rest of your peers.
There is another benefit from managing career risk.
Career risk can also mean that we are less likely to stand up for things that we believe in. By managing this risk appropriately, it means you are more able to speak your mind. It makes you more immune to ethical or philosophical compromises in a work environment. It also makes you more comfortable with taking risks that you think are in the best interests of your organisation and its stakeholders.
One of the biggest handbrakes on larger organisations is the propensity for people who want to keep their job to make overly conservative and safe decisions. This is symptomatic of people who haven't addressed career risk very well - they need to protect their own backside. While it might protect these decision-makers, it means the business does not take advantage of its opportunities, or may not address longer-term risks or issues that can be pushed down the line.
I discuss this topic on my new podcast. Check it out here.