What Mid-Year Job Change Means for Your Compensation and Finances

Switching jobs can be a huge undertaking, with lots of unknowns. Are you taking the right steps for your career? Will a new role improve your quality of life? There’s a lot to consider.

Beyond the professional impact, a job change can create ripple effects in your financial life, altering everything from your paycheck and benefits to your tax situation and long-term financial goals. Navigating this job transition with clarity and confidence means thinking through more than just the offer itself.

Here are some tips that can help when evaluating a potential job:

• Don’t be afraid to counter. Most companies expect a negotiation after their initial salary compensation offer. While negotiation is more art than science, sharpening these skills can lead to higher pay.
• Evaluate your equity. Equity compensation benefits should be considered an important part of your total compensation package. And if you're leaving a role where you have equity that’s not yet vested or options that haven’t been purchased, ask your potential employer about compensating you for these items in the form of a sign-on bonus to help exercise the options or replace your lost value by leaving before shares have vested.

Your new job structure will change your current finances. Once your pay has been finalized, start digging into the details of how it will change your finances and understand your insurance coverage:

• Understand your insurance coverage. Understanding your insurance doesn’t stop at confirming your new employer’s plan includes health insurance. Determine if your current providers are in-network. Get details on annual wellness visits and specialist costs. Additional offerings may include group life insurance in the event of your death and group disability insurance. These policy details should be understood as your group life coverage may not cover your full needs and overtime pay bonuses and equity compensation are typically not covered by group disability policies.
• Pay attention to lesser-known benefits. Benefits outside of insurance are often overlooked but can add value to finances or quality of life. Health Savings Accounts, Flex Spending Accounts and Dependent Flex Spending Accounts offer the ability to save funds pretax for health or child and elder care expenses. Your job may also provide mental health resources, fertility benefits and even discounts to local businesses.
• Decide what to do with your retirement accounts. When you separate from a company where you hold a retirement account, you have three options: keep the money where it is, roll it into an Individual Retirement Account (IRA), or roll the funds into your new employer plan. The benefits of rolling these funds into an IRA may include more investment options than a 401(k) or 403(b), whereas moving it to your new employer plan helps consolidate your accounts in one place. A CERTIFIED FINANCIAL PLANNER® professional can help walk through the pros and cons to decide which option will help you reach your financial goals.
• Don’t neglect your taxes. Switching jobs can impact your taxes in multiple ways – from ensuring the correct amount is withheld from your paycheck to properly transferring old retirement accounts to avoid unnecessary taxes or penalties. These concerns can be integrated into your planning by a tax professional and a CFP professional.

Switching jobs is a significant life decision, and the impact will be felt across your home and financial life. By ensuring you understand the potential implications, you can position yourself to start your new role with less stress and an improved outlook for you and your family.