Why Income Security is the New Job Security
March 19, 2013
Until about a decade or so ago, employees were heavily concerned with job security. Itâ€™s not that thatâ€™s no longer a concern â€“ itâ€™s just that itâ€™s so much harder to come by now. For this reason, income security has become the new job security. If itâ€™s impossible to be guaranteed a job, then the next best thing is working to make sure you at least have a steady income.
Even â€œPermanent Jobsâ€ Arenâ€™t So Permanent Anymore
It used to be pretty clear-cut; there were permanent jobs and temporary jobs, and everyone knew the difference between the two. Today, itâ€™s hard to tell the two apart.
Temporary jobs can last for months or even years â€“ theyâ€™ve become the new normal in the job market. On the other hand, permanent jobs can last no more than two or three years, and sometimes not even that long. Youâ€™re often on a job for only as long as a single project lasts, or until a bad quarterly earnings report comes along.
Whether you are officially classified as permanent or temporary is no longer that important â€“Â all jobs are now temporary. And either classification can very easily take on the appearance of the other.
Thereâ€™s no way to guarantee that your permanent job will remain permanent, so the next best thing is to concentrate on income security.
What is Income Security?
Income security centers on the ability to maintain a fairly consistent income in the face of an inherently unstable job market. It removes the focus from retaining a specific job, to being prepared to move to other jobs or income sources as needed. Think of it as a change in your working lifestyle.
How to Achieve Income Security
Achieving income security is more complicated than having job security. You have to prepare your life for change on an ongoing basis. The effort has to be approached in several different ways.
1. DevelopÂ transferable job skills.
Probably the single best way to achieve income security is to have job skills that are in demand by many employers, and even across industry lines. You have to identify what those skills are and then become proficient to the point of being an expert. Even if your current employer doesnâ€™t need you anymore, you will have the repertoire of skills that dozens or even hundreds of other employers are looking for, and that will enable you to replace your lost paycheck pretty quickly.
2. Maintain a perpetual job hunt.
This doesnâ€™t mean you can never settle into a good job, but that you should always have your radar up to survey the job market and the opportunities that are available. Keep your resume fresh and updated, network in different industries, and maintain a ready list of contacts so that you will be able to find a new job quickly.
3. Be prepared to change work styles as needed.
The entire nature of employment is changing rapidly, and we have to be prepared to roll with the punches. This might mean that there will be times when youâ€™ll need to take temporary jobs or even contract work, that not only will provide no permanence, but they probably wonâ€™t offer any benefits either. Recognizing the reality of the job market as it is, you have to be emotionally and financially prepared to take these arrangements at least on a short-term basis.
4. Developing multiple income streams.
If income security needs to be the focus today, then one of the best ways to achieve this is by having multiple income streams (perhaps a few passive income streams included). This could mean having your own business in addition to your regular job, owning income-producing rental property, or even having a high income investment portfolio. Outside income streams could give you the level of security that your job no longer can.
5. It might even mean keeping your own benefits.
Next to the loss of a paycheck, the biggest fear most people have about a job loss is the disappearance benefits. You can offset this by maintaining these benefits privately. This includes, first and foremost, health insurance. If you at least have a plan of your own, then leaving a job wonâ€™t be as disruptive as it would be if you were counting on the job for both income and health coverage.
How Savings and Investments Play a Role
An absence of job security raises the importance of savings and investments. It will provide three very important benefits that will strengthen your income security.
1. An Additional Source of Income
Weâ€™ve already touched on the use of an investment portfolio as an additional income stream. This can be achieved by creating a portfolio that has a mix of growth and income type investments. It might mean investing money primarily in companies that pay above-average dividends, but also have solid future growth prospects. This will create a passive revenue stream, and the larger it becomes, the less dependent you will be on a job.
2. A Cushion Against Lost or Reduced Wages
Your savings and investments can be like a large emergency fund. You can use it as a way of evening out a not always stable income flow. Or you can rely on it even more heavily during times of complete income disruption.
3. Preparation for Early Retirement
Early retirement has been the new cool trend in the retirement planning universe. But in a world where job security no longer exists, early retirement planning may now be a necessity. Once you reach a certain age â€“ certainly sometime in your 50s â€“ the prospect of at least an early semi-retirement may become more of a necessity than a luxury. Build your investment portfolio with that possibility in mind.
How else can we increase income security in a less stable job market? Leave a comment with your ideas!
All posts by Kevin Mercadante