Northwestern Mutual

Changing Jobs

Minimize the impact of a job change on your family's financial security.

Changing Jobs

If you're thinking about changing jobs—or are plunging into self-employment—make sure you are financially prepared to transition smoothly. A new position can be an exciting opportunity, but it may also add to the financial demands on you and your family. Ask yourself:

Changing Jobs
  • Will you take a pay cut to take advantage of the new opportunity?
  • Will you incur additional expenses for education, training, transportation or travel?
  • Will you need to relocate or sell an existing home?
  • Will you need to establish and furnish a home office?

If your answer to any of these questions is yes, then you'll want to make sure your plan to change jobs also includes a review of your financial plan.

To make the transition with minimal impact on the financial security of you and your loved ones, take steps to:

  • Build your emergency fund. Create a cushion to cover the cost of transitioning to a new job. There may be unexpected start-up expenses or delays in receiving a paycheck. Aim for six months of living expenses. Learn More.
  • Protect your income. If you currently have employer-sponsored life insurance, disability income insurance and health insurance, those benefits will likely end when you leave your job. Make sure you're fully aware of what you may need to replace to protect you and your family. Your ability to earn an income is your greatest asset. You need to protect it. For example, you can purchase an individual disability policy that will move with you from job to job as long as you pay the premium. An individual policy can also be a great way to protect your income if you're self-employed. Learn More.
  • Decide what to do with your qualified retirement plan, such as 401(k) or a 403(b). One of the decisions you will need to make when leaving a job is what to do with your retirement plan. You'll want to consult with a tax or financial professional before making the decision. Some options include:
    • Leave the balance where it is.
    • Roll it over into your new employer’s 401(k) plan.
    • Roll over your balance into another qualified retirement account, such as an IRA or a variable annuity.
    • Take the cash (and accept the penalty, if you're under the age of 59 1/2).
    • Consider your change an opportunity to save more.  If you'll be getting a raise with your new job (or, if by considering a new position, you got a raise and will stay with your current job), think about setting aside those extra dollars for retirement. It's a great way to add to your retirement savings and build your long-term financial security.

By taking these steps today, you can transition into the next chapters of your life with both excitement and financial confidence.

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