6.1 million people left their jobs in February 2022 as part of the Great Resignation, with many looking for a new job that better fit their financial needs. Many parts of your life can change with your career, from your working hours to your housing needs to what you can afford for your lifestyle. Regardless of your reason for changing jobs, it is important to understand the financial implications of the switch. Before you leave your old job, be sure to check in on financial needs like the ones listed below.
Life Insurance
If you had life insurance through your employer, it is important to reassess your needs right away. Group life insurance is often affordable, but its coverage is usually less than a family’s full needs. When you leave your job, most employers cancel your policy, but you may have the option to convert your group coverage to an individual policy.
See what options you have to cover your family adequately should the unthinkable occur. Individual coverage is a way to guarantee your family has peace of mind.
Even if your new employer offers group life insurance, it will still be a good time to meet with a life insurance agent to assess your needs and make sure you and your family are adequately protected. Connect with your life insurance agent today to evaluate your needs.
Health Insurance
Health insurance is often one of the largest benefits from an employer, and when you leave your company, you leave that benefit behind. While you can use what is called a COBRA benefit and extend your coverage for 18 months, that option can be expensive.
Think about how you will cover you and your family with health insurance and whether you have access to immediate coverage with your new employer. If you must, consider buying temporary insurance coverage, or turn to the Marketplace for coverage (you have 60 days for the special enrollment period).
401(k)
If you have an employer-sponsored 401(k), it is best to find a new home for that money when you leave. Some employers may allow you to leave your account with the sponsor, but you probably will not be able to make new contributions to it. In fact, almost a fifth of all the money workers have in retirement accounts are locked in plans with old employers — an amount that adds up to $1.35 trillion left behind, with an average account size of $55,000.
Instead, roll it over either to an IRA or the 401(k) at your new employer if they allow it. It is important to roll over the money and not withdraw the funds. If you withdraw before you are 59 ½ years old, you will have to pay a 10% penalty — plus income taxes on the full amount.
There are other tax-advantaged ways to save for retirement too, including supplementary income streams like annuities and risk-protected options like cash value life insurance. Some of these strategies offer protection from downside market performance while allowing you participate in gains when the market goes up. Talk to a financial expert today about how to make the most out of your retirement savings.
Income and Savings
You will likely have an income change with your new job, so you should revisit your budget and your savings plan. If you will be making more money, do not let lifestyle creep occur. Instead, increase how much you automatically send to savings or investments.
If you end up making less, figure out where you can cut back on your expenses so that you will not have to decrease the amount you save, but still maintain a similar lifestyle.
Talk to a Financial Expert Today
Accepting a new job can be quite a drastic life change. Before you jump right in, look at the big picture. How will changing jobs affect other areas of your life, not just your income?
Life insurance, health insurance, and 401(k) accounts are the most important areas to focus on, but you may have other benefits too that you’ll either need to replace or transfer so that you can maintain the personal finance path you’re on without too much interruption. Connect with your financial expert today to discuss all your options and embrace your new position with peace of mind.