Your income is your best resource, treat it as such, writes Neal Vaughan.
What is your job worth? According to The National Centre for Social and Economic Modelling in Canberra, average lifetime earnings for many of today’s professional 25-year-olds will be close to $3 million.
Australians with lower-paid jobs in services and hospitality will earn more than $1.6 million in their working life.
That’s more than double the Australian median property price of $612,000 according to Australian Bureau of Statistics figures for the third quarter of 2015. In fact, for most people, earned income will far exceed what they make from property, investing in the sharemarket or superannuation.
And yet many don’t ever think of their career as an asset that needs care and investment so it performs at its best and brings a solid level of reward.
“You should apply the same principles to managing a career as you would to managing a business. And in today’s flexible work world this applies to all kinds of work, not just executives and professionals," says Hays Recruitment senior regional director Peter Noblet.
"A tradesman has a career to manage just the same as a lawyer or marketing executive – a plumber's mate can end up as a manager in a property company while EAs [executive assistants] can make a move into being executives themselves," says Noblet.
But people often don’t take such a “management” approach to their job.
Most people are complacent, you start work and imagine getting your monthly pay until you decide to retire. But for many, a common physical problem, such as chronic back pain, can derail career ambitions and disrupt their income," ANZ head of life insurance Gerard Kerr cautions.
A simple precaution such as income-protection insurance can safeguard against misfortune. Just as taking a proactive, strategic approach to your social media profile can enhance your career prospects.
From his experience of managing careers long-term, Noblet suggests the key to achievement is to have a clear plan for your work goals, to improve what you have to “sell” by adding extra skills, and crucially, "improve your personal brand – this is particularly important in our digital social-media-driven world".
While everyone can work on their online profile there are some things you can’t control.
"Many people don’t realise they can take out income-protection insurance. It’s relatively simple and usually tax deductible. When you stop and think about managing without your income for even four or five months it should be on everyone’s to-do list," says Kerr. Of course, you should consider obtaining specialist tax advice in making this decision.
The fact is, income protection is on very few to-do lists. Insurance Council of Australia figures for 2014 show just over 6 per cent of Australians have protected their earnings with insurance, sometimes known as salary-continuance insurance.
Kerr says many people mistakenly believe their superannuation insurance provides the support they will need if they are forced to stop working.
“The problem is not all super provides this type of insurance cover and when it does the cover provided is often insufficient.” The additional premiums for this cover can also erode your super balance if a top-up strategy is not considered.
Also, insurance coverage in super is often limited to death or total and permanent disability.
"A temporary incapacity is much more likely – six months out of the office managing a back issue for example," says Kerr.
"Remember, if you can't work you go from contributing income to your household to draining income out – it's scary when it happens, particularly when you can't just go out and find a new job,” he adds.
The Australian Securities and Investments Commission's MoneySmart website has a useful guide to income protection, who it suits and levels of cover available.
Insurance policies commonly provide a regular payment of up to 75 per cent of your income, while allowing you to choose your benefit period e.g. two years, and waiting period, such as 60 or 90 days. But cover and the cost of a policy can vary widely.
So if you're thinking of protecting your most important asset, spend some time checking your options and consider getting professional advice on the most appropriate cover.