Job Change? Now is a Good Time to Revisit Your Financial Plan

When you change employers, embark on a long sabbatical, take early retirement, or experience any sort of significant career shift, you face a new set of financial challenges. A new job might reverse plans or steer you in a new direction. You might need to reassess what you value, how you manage assets, and what you need financially. Consequently, this is an ideal time to revisit your financial plan.

Consider first how a new job might affect your earnings. Whether you shift from full-time to part-time or vice versa, from full-time to consulting, or into early retirement, your benefits, tax position, and investment goals will likely change. Would you like to increase investments in-line with your salary or scale down in the face of change and uncertainty? Will you postpone plans to purchase property, retire, or start a business?

Let’s take a look at just a few of your financial considerations during this time.

Benefits and retirement plans.

Your benefits and retirement plan may change when you move to a new employer or become self-employed. You may have new health insurance, new retirement savings options, new contribution types such as a ROTH, different plan calculations and formulas, stock options, or bonuses. You might also qualify for tax-friendly benefits like a flexible spending account (FSA) or health savings account (HSA), which may change the amount of net income you retain after tax.

Relocation.

If you need to relocate for a new job, you might face cost of living adjustments and increased housing expenses. Consider the cost and tax implications in purchasing or selling a home or in moving to another state or country.

Insurance coverage.

Consider the risk and demand inherent in your new job and any adjustments you might want to make to life insurance, disability, and liability coverage.

Retirement.

Some define retirement as the point at which you stop receiving a paycheck from an employer and begin to receive one from yourself. As we plan for retirement, there is often an assumption that we can choose the most convenient time for this to happen. But retirement is sometimes unplanned due to a company downsize or merger, a family emergency, conflicting obligations, or a health concern. When retirement occurs in advance of Medicare eligibility, you will need to consider the cost of an individual medical policy. Whether retirement was deliberate or not, you will also need to revisit your financial plan to determine the amount you can pay yourself to keep your long-term goals on track.

Tax implications.

Whether drastic or not, a job change can have tax implications. A large part of one’s financial plan is investigating the portion of income you will retain after tax. That figure is affected by a number of variables including new investment options, changes to contributions, and the election or loss of tax-friendly employee benefits.

How we help

As earnings, benefits, insurance coverages, retirement plans, taxes, and new expenses change your investable income, AAF Wealth Management and AAFCPAs advise that clients reassess their financial plan accordingly. The more drastic the change, the more important this can be. But even the slightest career shift can involve a lot of moving parts that might need to be adjusted, particularly in light of tax advantages you might enjoy with various types of accounts available.

We work with clients to assess new investment options, rebalance portfolios, and to help ensure plans continue to align with financial goals and risk tolerance. A job change can be one of the more stressful events in one’s life. But we can work to help minimize if not eliminate the financial challenges you face.

If you have questions, please contact Jonathan Bloom, CFP®, AIF®, Director & Senior Wealth Advisor at 774.512.4081 or jbloom@nullaafwealth.com—or your AAFCPAs Partner.

AAF Wealth Management is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where AAF Wealth Management and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by AAF Wealth Management unless a client service agreement is in place.