If you’re considering making the move to a better career opportunity, below are some tips to keep in mind so that your finances don’t take a hit in the process.
Making the Transition
Income Gaps: Evaluate your current savings situation—do you have an emergency fund to cover expenses in case of a gap in paychecks? If you have the luxury of time to start a savings plan, do it. Otherwise, consider low-rate loans such as a personal loan or home equity loan or line of credit to temporarily cover your expenses in the case of an income gap. Once you have consistent paychecks, revisit building your emergency fund.
When your paychecks do start coming in, be sure to set-up direct deposit with your new employer so you have access to your funds immediately.
Higher Taxes: If you’re making more in your new job—congrats! So you don’t get any surprises on your tax return, meet with a tax advisor to understand the potential income tax ramifications of your new wage so you can make adjustments well in advance.
Health Insurance: Review the new health insurance plans, and consider switching to a spouses plan if you’re married and their coverage meets your needs better. If you’re unmarried, carefully weigh the monthly cost against the deductibles—you might be able to trade a higher deductible for a lower-cost plan if you’re generally healthy or you have enough in your emergency fund to cover the full deductible if needed.
Protecting Your Retirement Savings
Before you make the transition, check to see if you’re fully vested so you understand whether your full retirement savings will be available to you. If you’re close to being fully vested, it might be best to time your departure so that you receive the full benefit of those retirement funds.
Once you’ve decided that the time is right, you can leave the funds where they are, or consider a roll-over to a new employer plan or to a private account that you can set-up at Rivermark. Cashing out your retirement plan could have serious tax (and other) penalties, so be careful to understand the full scope of penalties if you choose that route. You can schedule a free consultation with a Rivermark financial advisor by calling 503.526.5606.