In many cases, people don’t pay attention to their finances until they are in times of transition. A common event is changing jobs. This can be a stressful time, or a time of great opportunity if managed well or prepared for in advance.
Unplanned job changes can be particularly hard for many reasons:
Generally, the pressing need to find new employment is top priority. While this is critical, there are other important decisions to be made while in job transition. Some need to be made immediately while others can wait. Working with an expert third party, like a financial advisor, can help you sort through these time-sensitive priorities.
Consider the health insurance options that may be available:
Even for those who have a financial cushion, the pressure of forthcoming bills and costs while not generating expected income can be very stressful and make it hard to stay objective. We work with our clients to break down their costs and budgets into priorities. This allows them to know immediately where they can save money on a monthly basis should they face a cash flow crisis. By breaking down your monthly cash flow into must-haves, preferred and discretionary costs, you will generally be able to adjust your costs substantially. You may also be able to notify your creditors of your job loss and have them abate your payments for a short period of time.
Finally, what should you do with my company-sponsored retirement plan? Hopefully, you will not need to access these funds to bridge the gap between jobs. If you are younger than 59 1/2 years old, the Internal Revenue Service (IRS) will assess a 10% penalty, plus ordinary income taxes on any monies that are distributed. If you are older than 59 1/12 years old, distributions will be taxable as ordinary income, without the 10% early withdrawal penalty. This is where a financial professional can help with guiding you through any distribution process you may choose.
There are many things to consider when changing jobs. Many people will change jobs at least once in their lifetime. Job change frequency can vary based on industry and job type. Hiring a professional to help you during this transition can help you stay objective and take the stress out of the financial decisions that need to be made.