While switching jobs or careers may be exciting, it’s important to do your due diligence in order to maximize your financial benefit and to protect yourself. Even if the new position pays more, pay close attention on the compensation and benefit details to avoid surprises and ensure a smooth financial transition.
When you change jobs, important differences are likely to surface between retirement plans, health insurance and other programs at your old employer vs. your new employer. Navigating these differences is critical in getting the most out of your benefits and protecting long-term investments.
Here are some tips for taking the right actions before, during and after your career change:
In the weeks or months leading up to a career change, you can take steps to begin preparing for the transition ahead. Some things you can do to prepare:
As you research retirement benefits, reach out to an financial and investment advisor for assistance.
The transition period tends to be a flurry of activity and you may be tempted to check any box when called upon, whether by your previous or new employers, when making decisions on benefits, stock options and other programs. But it’s important to pay attention because hasty decisions can have serious long-term impacts on your finances:
Once you get settled into your new position, turn your attention to what comes next. Be sure you are taking full advantage of the benefit plans available to you. Stay on top of the tax situation for this transition year. Consider using any raise in pay to bolster your savings or pay down debt.
Now is also a good time to update your financial plans for the long term, including investments and retirement accounts. Use our 401(k) Contribution Calculator to evaluate your various levels of contributions and realize the future value of your retirement accounts.
If you are rolling over assets to an IRA, work with a financial advisor to select appropriate investments and tactics such as low-cost mutual funds, making sure to diversify among different asset classes, and develop or restore an allocation that fits your goals and stage of life.
Consider holding a “financial summit” with your spouse and financial advisor. Go over the recent changes in your financial situation, evaluate the assets available for retirement and other life plans, and make adjustments as appropriate.