Fall seems to be the time of year many people either willingly decide to change jobs or are forced to due to downsizings or restructuring. If you are changing jobs, here are the top financial considerations:
SWITCHING FROM ONE JOB TO ANOTHER CAN LITERALLY PAY OFF
Data from payroll processing giant ADP confirms that statement. In the first quarter of 2016, the average job hopper realized a 6% pay boost!
That’s a pretty significant jump in pay, so it’s definitely something to consider. We all get comfortable in our jobs, but as you can see it may pay to look elsewhere. You never know what opportunity may be out there for you if you are not looking.
Nevertheless, before you make that leap, be sure you address these matters:
How quickly can you arrange health coverage?
If you already pay for your own health insurance, this will not be an issue. If you had coverage at your old job you will need to figure out how to replace it.
If you were enrolled in an employer-sponsored health plan, you need to find out when the coverage from your previous job ends – and, if applicable, when coverage under your new employer’s health plan begins.
If the interval between jobs is prolonged, and COBRA will not cover you for the entirety of it, you may want to check whether you can obtain coverage from your alumni association, your guild or union, or AARP.
If you are leaving a career to start a business, confer with an insurance professional to search for a good group health plan.
YOUR RETIREMENT SAVINGS
What Happens With Your Retirement Savings?
You will likely have four options regarding the money you have saved up in your workplace retirement plan: you can leave the money in the plan, roll it over into an IRA (this is the option we help with at Weiss Financial Group), transfer the assets into the retirement plan at your new job, or cash it out.
Keep in mind that the last option will be taxable and may incur a 10% early withdrawal penalty if you are not yet 59 1/2.
Here is a link to another blog post that goes into greater detail about what to do with your retirement account when you leave your job: 4 Options for Your 401(k) When You Leave Your Job
YOUR CASH FLOW
Can you manage your cash flow effectively between one job & the next?
First, you’ll need to truly understand if you can make this work. I suggest taking pencil to paper and filling out a cash flow worksheet to figure out what your needs are.
Here is a link to our cash flow worksheet to make things easier for you: http://bit.ly/CashFlowWorksheet
Use can also online tools to help with this. We use first step cash management with our clients. In my opinion this is the best cashflow planning strategy available. If you are interested, as a thank you for watching the video and reading this post I will give you free access. Simply send a private message request to the Weiss Financial Group Facebook page and I’ll get you set up.
This all makes the case for having an emergency fund in place. Do you have one? Take a look at this blog post I wrote: How Big Should Your Emergency Fund Be?.
Finally, I recommend postponing big purchases, and avoid running up large credit card debts you will regret later.
- Make sure you keep your household money needs top of mind
- Make sure you address your insurance needs
- Strive to keep saving for your future at your new workplace
- This material was prepared, in part, by MarketingPro, Inc.