As the end of the year approaches, you may have thoughts about quitting your job and starting fresh next year. January is ideal for changing careers, returning to school, or starting a business, and it appears several people on my LinkedIn feed have already made a change. Moving to a new company or starting a business is exciting, but make sure you have a plan before you leap.
Is the grass greener on the other side of the fence? My dad often asked if I was running from something or towards something, and it made a big difference. Are you quitting your current job to pursue a better opportunity or to improve your position? If you're unsure, write down the reasons you want to move. What are the pros and cons of leaving your current employer? As Pete Townsend and the Who sang, "Meet the new boss, same as the old boss." Be careful, and don't get fooled again.
Below are a few suggestions for all the job hoppers.
- If you plan to take some time off before starting a new job, ensure that your cash balance can cover 12 to 18 months of expenses. A significant cash balance can make your transition more manageable because you can avoid debt or liquidating your investment holdings.
- Keep a Journal about why you want to move to a new employer or start a business. Writing your goals can help you clarify your thinking.
- Create a budget. Do you have the resources to change jobs or start a business? Will your budget support your new lifestyle, or can you reduce or eliminate some items?
- Review your health insurance coverage before making a transition. You might be able to continue your insurance coverage for a few months through COBRA. Here is a link to the Department of Labor's COBRA site: https://www.dol.gov/general/topic/health-plans/cobra. You can purchase coverage through the exchange if you don't have healthcare access. Here is a link: https://www.healthcare.gov/. Regardless, your healthcare insurance premiums will be expensive.
- You have several options if you participate in your employer's retirement plan. You can leave the assets in your plan, roll over your assets to an IRA, or receive a cash distribution. If you're under 59 and a half, I recommend against the cash distribution because you'll pay a 10% penalty on top of income taxes. You can also transfer your old retirement account to your new employer's plan.
- Can you exercise your restricted stock units or stock options before you leave? Will your new employer reimburse you for equity compensation you lost because of vesting?
- Hire an attorney if you have a non-compete clause. An employment lawyer can help you avoid trouble with your previous employer before it starts. It's worth spending a few dollars on attorney fees to keep you out of harm's way.
- If you're starting your own company, hire a business attorney to help you launch successfully. In addition, separating your finances by opening a business checking account, credit card, and business email address will look more professional.
A new year is full of hope and optimism, especially following this year's challenges. A new job or career change may rejuvenate you and give you the energy to soar to new heights.
The only way to do great work is to love what you do. If you haven't found it yet. Keep looking. Don't settle. ~ Steve Jobs
December 12, 2022
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM's custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
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