Income Identity

I have been thinking a lot about career and life transitions lately. Transitioning to part time work or half retirement has been relatively seamless. But, I have to admit that there was quite of bit of emotional work that took place before the fact. I had to wrap my head around not being the almighty doctor anymore. My authority would no longer be a given. My importance in the world would become less obvious. I could no longer fall back on a title. Innately tied to this concept was my income identity. I identify as a huge wage earner.

This identity, however, is no longer accurate. My current wages, a fraction of prior, no longer elevate me to such vaunted heights. Which is fine because I no longer need as much to sustain my trajectory. I front loaded the sacrifice so that I could slow down.

But did it feel fine?

The W2 Asset Class

I definitely consider W2 income to be it’s own asset class. Unlike most investments, it is one of the few that consumes time instead of money. Otherwise, it is no better or worse than any of the other asset classes. Does it matter whether the majority of money is made through stocks, real estate, side hustles, or a main gig?

Not really. Or at least it shouldn’t.

Yet our basic wage seems to become part of who we are. It is our income identity. The amount of money someone is willing to pay us to do whatever we are expert in.

And this feels good. Sure we like to collect passive income from multiple sources. Yet, there is something special about what someone is willing to pay you to do your job.

It becomes a question of self worth.

Career Transitions

Leaving a high paying job for a lower due to burnout, fatigue, or just plain loss of interest is probably a good thing. Who wants to spend their lives toiling away at a job they despise?

There is, however, a loss of identity that takes place with such moves. Income identity becomes a huge part of our work persona. Giving up status is not easy. It’s not just the dollars and sense. It becomes a deeper issue about personal worth.

We define ourselves by what we are able to make. How well we provide for ourselves and those we love. Intentionally giving up income almost feels like self deprecation.

We are undervaluing ourselves.

Retirement, Early or Otherwise

The natural progression of these thoughts brings us to retirement. If transitioning careers is hard, leaving the work force completely can be particularly devastating. Especially to high wage earners.

So when you drop your income identity, like any part of your identity, there is a struggle to fill the gap. Who am I if I don’t make a lot of money anymore? What is my importance if no one is willing to pay me to achieve something.

While these feelings are natural, they are not often discussed in the FIRE community. We spend so much of our time building a nest egg we get caught in the accumulation phase.

Final Thoughts

Career transitions and retirement can be a gift. They are a reward at the end of a tunnel which is often difficult and anxiety ridden. If you are unhappy at work and have the economic wherewithal to make less or leave altogether, it is a boon.

Yet, we don’t emotionally prepare ourselves for this change. We don’t recognize that income identity is a huge part of how we define ourselves.

This is not something that can’t be overcome.

We just need to be thoughtful about it.