Switching Jobs? Here’s How to Keep Your Finances on Track.

If there’s a waiting period before health insurance kicks in, you may need to sign up for COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage or interim catastrophic insurance. Ask your financial advisor to walk you through your health-care coverage options, including the benefits of a health savings account (HSA). 

Your advisor can also help you weigh benefits that require a payroll deduction, such as education savings accounts, family care or HSAs. And look at your new employer’s offerings for life and disability income insurance—if they’re not as generous as those of your former company, your advisor can do a full assessment to help you determine whether you might need additional coverage. Some companies now offer student-loan repayment assistance plans—something your former employer may not have offered, notes Tantillo.

In addition to interim health-care coverage, you may have additional temporary expenses—moving costs, for instance, or the cost of a long-distance commute until you get settled closer to your new workplace. “Keep in mind that a job change can make it more difficult to immediately qualify for a mortgage or other loans, so you may need to manage two housing payments, or rent for a period,” Taylor says.

According to a December 2020 survey from Civic Science, 43% of U.S. adults aren’t fully aware of their 401(k) options when they switch jobs. You may have several choices, including 1) leaving the funds with your old employer; 2) rolling the balance into a traditional or Roth IRA; 3) moving it over to your new employer’s plan; or 4) cashing it out—though that may not be advisable from a tax or retirement-readiness perspective, notes David H. Koh, managing director with the Chief Investment Office for Merrill and Bank of America Private Bank.

Similarly, you’ll have decisions to make about where to deposit or invest any vested profit-sharing that you’re entitled to from your old job. Your financial advisor and tax professional can help as you decide the best course of action for your situation, which will depend on your 401(k) balance, the investment options and fees in your old and new accounts, your tax bracket and other considerations.  

“When you open a retirement account at your new employer, take a look at the company match, the plan’s investment options and your new salary, and consider increasing your contribution,” says Tantillo. “Try to meet the match, at the very least.” 

That depends. Moving from a more established company to a startup could lower your appetite for taking on investment risk, Koh notes—and also could affect your diversification strategy. Heavily investing in your new employer might mean that your investment results are too closely tied to a single company’s success. “If you’re tying yourself to a new venture that’s going to heavily concentrate your wealth to a specific sector or asset class, you might want to rethink what your overall diversification strategy looks like,” Koh says. Overall, he adds, “Job transitions present a good opportunity to assess your progress toward specific financial planning goals and to consider potential adjustments.”