5 Tips to Consider Before Switching Jobs

5 Tips to Consider Before Switching Jobs

By: Allie (DeYoung) Schmidt, Financial Advisor, CFP®, CPA

1. Benefits: It’s about more than just salary.

For many job seekers, the only number they’re concerned with is the bottom line…what is my salary? But when comparing opportunities from a compensation perspective, remember to account for benefits such as health insurance, employer funded Health Savings Accounts, employer match in your employer-sponsored retirement plan, vacation days, etc. These benefits can be worth thousands of dollars and can turn a lower salary job with these benefits into a more lucrative venture than the higher salary job without benefits.

2. 401(k): What to do with it now.

There are several options for your 401(k) when you leave your employer: 1) You can leave it where it is, 2) cash out the account value, 3) roll the balance into your new plan (if it allows), or 4) you can roll the funds into your own IRA (Individual Retirement Account). According to the Bureau of Labor Statistics, the average worker has between 12-15 jobs during their lifetime. That is a lot of “old” retirement plans to keep track of. To avoid this potential record keeping nightmare, consider options 3 or 4. Rolling each account into your own IRA can help you avoid having to change your investments every time you switch jobs and potentially gives you more investment options to choose from.

3. Don’t leave money on the table: Are you fully vested?

Before leaving your current job, be sure to take a look at your retirement plan at work and any pension plan you may be eligible for. Specific to your employer’s Plan Summary Document (available through your HR department), it is likely that your employer contributions to your retirement plan and eligibility for your pension plan is based on a vesting schedule. This means that the amount your employer has been putting into these plans for you is not necessarily yours until you’ve worked as an employee for a certain number of years. If you’re close to vesting or becoming eligible for a pension, it might make sense to try to stay put until you reach that date. It could mean a lot more money coming your way in the long run.

4. Adjust your budget: Control lifestyle creep.

If you’re considering taking a position that will be a decrease in your income, maybe you’re joining a start-up or following your dream, be sure to consider the new income in your current budget and make decisions of where you’ll cut back once your income decreases. On the flip side, if your income will be increasing, be sure to increase your savings right away to avoid “lifestyle creep” where your needs and wants rise to meet your increased disposable income that’s coming in. If you’re not diligent, your lifestyle can increase in lockstep with your income, requiring you to always earn that higher income to provide for your lifestyle and likely work longer to save enough for retirement.

5. The intangibles: Work/Life Balance, Opportunity to make a difference.

It’s not all about the Benjamins! Be sure to take a step back and evaluate what your potential job change will do for your work/life balance. The feel of a new work environment and employee culture is a huge factor in any job. Getting up and going to work in a place you want to be, doing what you enjoy, surrounded by people you appreciate can be priceless.