I know that leaving a job and training with a new company is a complex transition. In addition to the actual employment change, there are an overwhelming number of other details that need your prompt attention.
This past spring, my husband and I moved to a new town, and we both transitioned to new employers. Anticipating the next step in my life and career should have been exciting, but I found myself swept up by worries (some worries were more valid than others!). It was a lot of change happening at one time, but we muddled our way through. The transition was not always smooth, and I learned a lot along the way.
From our experience, I want to share tips on what to look for and how to be proactive during a job change.
1. Investigate your health insurance situation
As a qualified employee, I would receive health insurance benefits through my new employer within a few months, but I didn’t know what to do about insurance before then.
I contacted my human resources team and asked about the Consolidated Omnibus Budget Reconciliation Act (COBRA). Larger employers offer COBRA, which allows you to extend your existing coverage up to 18 months. After some helpful conversation, I learned I would bear the full premium plus an additional fee. There was some sticker shock, so I opted for another method.
However, if you have health needs that require continuity with prescriptions and doctors, this might be your best bet despite the expense.
After some research, I learned more about short-term catastrophic health plans.
These plans have a very high deductible, which means they only pay out in a major health event such as an accident or major illness. These plans will not be very helpful in covering your regular prescriptions or doctor’s visits. I found a reasonable plan for less than $100/month. While I DO NOT recommend these as permanent plans, it was helpful and brought peace of mind when I needed protection for just a few months.
2. Know where you stand with life and disability insurance
Life and short/long-term disability insurance policies are common employee benefits that may change when you get a new job.
Life insurance is not always necessary for younger individuals, but it is almost a necessity for people who have dependent children.
If you know a job change is coming, talk to a fiduciary advisor and have them complete a life insurance needs analysis. They can direct you to a policy that best fits your needs and protects your family. This step can and should be completed well in advance, so you don’t have extra concerns during the actual transition. Be on guard for salesmen trying to sell an expensive policy with commissions. Find an advisor who will watch out for you.
Life insurance seems to get all the attention, but disability insurance is arguably even more important. If it wasn’t for the talking duck on commercials, many consumers may not even know it exists.
In reality, you are more likely to use disability insurance than life insurance. If you were seriously injured, how would you provide for your needs? Dual income households are better prepared to meet the challenge. If you have a single income household, I urge you to find short and long-term disability insurance policies.
3. Make sure people know about your job change!
You may have used your company-provided email address as a recipient for industry newsletters or as a user ID for non-company related websites. Ensure that you update these sites right away with your personal email address, so you don’t miss out on any information you may want!
Also, I have learned that professional connections often want to be informed of big changes. Share your positive career updates on social media sites liked LinkedIn; people genuinely want to congratulate you! Plus, it will be easier to network with individuals related to your new company after you make the change.
4. Research your retirement plan options
If you had a retirement plan like a 401(k) with your previous employer, more than likely, you do not want to leave it there.
For consolidation purposes (I’m a fan of simplifying!), you can consider rolling it into your new 401(k) plan. Your investments are in one place; therefore, they are easier to manage. However, be sure that your new employer’s plan offers solid investment options and that the fees are competitive.
Another good option is to roll your 401(k) plan into an individual retirement account (IRA). Since an IRA is a qualified account, you will not owe taxes on the direct transfer. The primary reason people rollover their 401(k) into an IRA is to have more investment options. Generally, an IRA allows you to invest in any security you wish. You are not limited to just the handful of mutual funds your 401(k) sponsor provides. You can also avoid the 401(k) plan’s fees by moving to an IRA.
If you are in a job transition now, you probably already have a lot on your mind.
I hope the advice from my experience has helped you as you prepare for your new role! If you have not had a job change yet, you likely will eventually! Inform and prepare yourself in advance for the curveballs life throws your way. I have a real passion for helping people create a financial plan for their future and navigate life transitions. If you have already been through a job transition and have learned any other valuable lessons, email me and let me know! I am eager to learn new things about other people’s experiences.