It’s completely normal to consider changing your job. The average person changes jobs about 12 times in their lifetime, sometimes due to challenging environments, relocations, or career goals.
But before you change or quit your job, there are things to consider: First, why do you want to quit your job?
Why do you want to quit your job?
Generally, people leave their jobs because:
- they dislike their boss,
- don’t see opportunities for promotion or growth, or
- are offered a better gig (and often higher pay);
These reasons have held steady for years. Sometimes it’s due to influence from peer group performance or a combination of any of these reasons.
Before quitting your job, first, you should know your “Why?”
For instance, if you don’t like your payment, you can ask for a raise. Just remember that having the right approach is always crucial when asking for a raise.
First, make sure that the company is in a good financial state to meet your demand and ensure that you’re qualified for it. Then communicate clearly but politely.
If your income isn’t the issue, maybe it’s the stress? If that’s the case, you can consider working from home.
Working from home has various benefits like:
- Saving on into transportation, gas, car maintenance, and parking fees
- Working under more comfortable conditions
- Less commuting time and stress
- Healthy freedom, since you can work without restrictions
- Boosting better work-life balance
If you still choose to quit your job, here are a few steps you need in place:
Figure Out Your Health Insurance Plans
Most Americans get their health insurance coverage through their employer. So, if you’ve decided to quit your current job, you’ll want to figure out how to get new health insurance coverage.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), people who work at companies with 20 employees and above can pay to continue their employer’s insurance plan for some time.
You remain privy to the same health benefits your employer’s health plan afforded you with this option. You’ll be able to avoid large medical bills if you experience a lapse in coverage.
However, your employer is entitled to stop paying his part of the insurance premium. And as a result, the COBRA health coverage will only be available for a limited time. You’re only allowed to enjoy this coverage as an ex-employee for 18-36 months, depending on the reason for application.
What this means is that you will bear the full financial implications yourself. That is until you get another job, anyway.
Figure out what to do with your 401k money
A 401k is a retirement savings plan that allows employees to pay a percentage of their income into an account every month for long-term investment. That percentage is automatically withdrawn from the employee’s paycheck and invested in funds that the employee chooses.
When you decide to quit or change your job, you need to decide what happens to your 401k account.
Here are some options to consider:
1. Retain the present plan
You can decide to keep your retirement savings in the investment plan of your former employer. Your money will keep growing tax-deferred.
However, this option largely depends on how much you have saved up. If it’s less than $5,000, your employer may decide to cash it out for you.
2. Transfer the money into a new employer’s plan
This is an excellent option if you’ve had several jobs in the past and don’t want to have several 401k accounts. So, you can transfer your old 401k into your new employer’s plan for retirement.
3. Roll it over to an IRA
You can move your 401k money into an Individual Retirement Account (IRA). An IRA provides various investment options. To know which to go for, contact the services of a financial advisor to get expert advice.
Depending on what type of 401k account you had — traditional or Roth — you can transfer your money into a traditional or Roth IRA.
4. Cash Out
This option should only come into play if there are compelling reasons like emergencies.
Choosing this option would mean losing a percentage of your money to taxes and other liabilities.
Bottom Line
Whether you decide to quit your job or not, your financial independence should always be at the forefront of your mind. You want to meet your financial goals and retire well, with enough money to maintain your desired lifestyle .At the Art of Financial Planning, we’re building a community to help you plan for financial freedom. Our goal is to help you create, manage, and protect your wealth.
Join us today.
