Under normal circumstances, job transitioning is an exciting and often nerve-wracking time. You’ll meet new people, have new responsibilities, and hopefully more money in your pocket each month. However, the landscape looks very different for the 26 million Americans who have lost their jobs during the COVID crisis.
As many are wrapped up in exploring their employment options and making adjustments to their spending and savings habits, there are also several financial tasks we should be taking care of to set us up for success after the dust settles, post-quarantine.
When you take care of the 6 tasks outlined below you can head into your new position knowing you have your financial life in order.
Take Your Old Retirement Plan with You
It’s incredibly common for people to simply forget about their old retirement plan when job transitioning to a position at a new company and often don’t seek them out for years or even decades until they seriously start to think about retirement.
This is often a mistake, as while any retirement plan is better than none, those are often years in which you could have made more from your savings if they were in a better plan or managed by your financial planner. Find the documentation or login information for your 401(k) or 403(b) now and ensure that money continues to grow.
You should also do some research on the plans your new company offers (or ask for advice from your financial planner) and choose the one that will be most beneficial to you. Always contribute to the maximum match your company offers. This is free money and should not be left on the table.
Look at Your Old Compensation and Benefits
If the compensation and benefits at your old company included stock options and equity-based compensation, you need to consider whether you’re leaving money on the table. Depending on the timing of your departure – this may not be feasible, but if you’re planning a big move you should consider:
- The vesting status of your shares
- Whether your employer is public or private
- What type of equity compensation you are/were provided
- Why you’re leaving (a new job, starting your own company, laid off)
- Your contractual obligations
If you can keep or sell any stock in your company, now may be the time to do so. To fully understand your current (and future) compensation, talk to your financial planner.
Check Out Your Health Insurance Coverage
Job transitioning can also mean making a transition to a new health plan, so look into what options you have between employment and check out what your new employer offers in coverage and in pre-tax benefits such as an HSA, which can be a great investment tool as well as offer you financial protection should you require treatment. You should also check the terms of your new health insurance, as some companies and policies won’t kick in until you’ve been in your position for a certain length of time.
Don’t Go Without Life and Disability Insurance
Just like health insurance, many companies offer their employees life and disability insurance plans as part of their benefits, but not all. If you had life and disability insurance at your last employer, and you were terminated or let go, you likely no longer have coverage. Because of this you may need to purchase it privately. We can help you navigate this.
Check Any Deferred Compensation Plans
Depending on your unique situation…If you’re planning to leave but have yet to notify the company you currently work for, check any deferred compensation plans now, and see how they’ll be paid out when you leave. The terms of these plans can be complex, so it’s always a good idea to talk over your plans with your financial planner and let them guide you on how to move forward.
Reflect and Plan For Your Investment Goals
Job Transitioningis a great time to:
- Go over your budget (even just the big expenses and percentage of your salary you can save)
- Create your net worth statement (everything you own – money owed = net worth)
- Use that statement to decide if there’s debt you need to pay down so you can invest and spend more meaningfully
This COVID crisis can be an opportunity to set your finances up for success so you can dive head-first into your new role knowing your financial situation is as strong as it possibly can be.
If you’re looking for additional advice or find any of the terms confusing, don’t hesitate to reach out to us for help. We give financial advice for women (from women!) and will never speak down to you. We aim to empower all women to make the very best financial decisions, no matter what life throws at them. To learn more about how we can help, check out our job transition page