The Great Resignation is real, especially among millennials feeling burnt out from the pandemic. According to the U.S. Department of Labor, during the months of April, May, and June 2021, a total of 11.5 million workers quit their jobs. Many are leaving without a plan, planning to dedicate their free time to following creative pursuits and carving out a new career path.
But if you are ready to move on from your work life — whether to start a business, take a new employer’s offer or flee a toxic environment — there are some smart steps to take so your finances aren’t affected by the transition. Here are eight things to do before quitting your job.
Or, more importantly, what will happen to them if you vacate your position. Some benefits can (sort of) come with you. For instance, you can roll your 401(k) earnings into an individual retirement account or the 401(k) account you set up with a new employer. Most benefits will lapse, though, and others may get straight-up forfeited. (See: unused vacation leave or pending quarterly bonuses.) Set up some time with a human resources representative so you understand the full ramifications of your exit.
Your health insurance is most definitely on the “lapse” list, so you’ll need a health care plan, figuratively and literally. Ask your soon-to-be-ex-employer the exact date your coverage will end. If you’re starting a new job, check with your next employer when that coverage starts. (It’s not always Day One.)
You have options for covering gaps or, in the case of self- or unemployment, an impending lack of coverage. That includes special enrollment through the federal or state exchanges, short-term health care plans or COBRA, which lets employees keep their old health insurance after they leave their job.
Employer-sponsored group life insurance also isn’t portable, though some companies let you convert your coverage into an individual policy when you leave. In either case, now’s the time to shop around for a private policy. Premiums go up as you age or develop health conditions. Plus, even top-notch workplace policies don’t provide the level of coverage most people need. (We can help you quickly compare life insurance quotes here.)
Disability insurers require proof of income when you apply for coverage. If you’re leaving a job without a new one lined up or you’re going freelance, it’s a good idea to get coverage before making the transition.
Another tip for anyone who isn’t jumping from one job to another: You’ll want to make sure your resume is up-to-date and your personal website or portfolio showcases your best work so you can hit the ground running on your last day. Also, be ready to explain any gaps in your work history. (We've got some tips for that here.
Once you leave your job, you won’t have access to your company email, workplace intranet or devices, so be sure to update your contacts and store important (non-proprietary) notes or projects. Also, follow any instructions for getting into accounts you normally access via your company email address — like your work-sponsored 401(k) or your human resources portal. That way, you can access old pay stubs and important tax documents down the line.
The general rule of thumb is to have three months of expenses in an emergency fund. But, if you plan on leaving one job without another, it's important to bulk up. Bank at least another two or three months of expenses before embarking on your quest for fulfillment.
A job switch is almost always accompanied by a change in salary. Ideally, that change involves an increase in income — in which case, you’ll want to consider upping retirement contributions, paying down debt or even adding (a little) extra to your discretionary spending fund. If your income is taking a hit or going on hiatus, you’ll want to trim the fat. Personal finance apps can help spot your money-wasters or you can go old-school and use this simple spreadsheet to draft a new budget.
How can you tell the difference between a bad day and a serious call to a career change? Here are eight ways to know it's time for a new job. (https://www.policygenius.com/blog/8-ways-to-know-its-time-for-a-new-job/)
Image: Michael Krinke
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