Navigating Career Changes While Keeping Your Financial Plan in Check

Before we talk about your old job – which, let’s face it, is likely not a top priority while you’re searching for something new – it’s important to discuss the mad dash that happens once you’re finally hired at your new company. When starting your new job, there are many important things to consider when selecting your new benefits during your onboarding process. Some of the common things that make a meaningful impact on your financial plan include the following:

Life, Health, Disability, and other insurance: Having adequate insurance (or lack thereof) can critically impact your long-term financial plan. When you change jobs, you’ll often be asked to select from a wide variety of different insurance options that your new employer can offer you. Some of these options may be offered for free, while many others may result in reduced compensation, either before or after tax. It’s important to look at these options to determine where and how they may fit into your overall plan and life stage. A single person without children will need vastly different benefits than a sole earner with a family, young children at home, or a mortgage to consider. Insurance can bring significant peace of mind, but can also be “overdone”, so it’s important to find a good balance between paying for either too much or too little. Consider asking yourself some of the questions below when deciding which insurance options will work best for you.

• Should you opt for a life insurance benefit? If so, how much? What sort of debts would your beneficiaries need to take care of?
• Does it make sense to pick a health insurance plan with a higher deductible and a health savings account option? Or should you consider a higher premium with lower deductible payments?
• What sort of disability insurance makes the most sense? Do you need it to be short-term or long-term?

Tax Withholding selection: Usually, one of the first things you do when starting a new job is fill out your form W-4, employee’s withholding certificate. This form tells your employer how much federal income tax to withhold (states also have their own version if you live in a state with income tax). The problem with filling out this form blindly is that it often gets your tax withholding wrong, particularly if you have a spouse who works or other income sources. No one likes surprises at tax time, particularly if that surprise is a large bill from the taxing authorities. Additionally, you may be hit with penalties and interest for not paying your tax bill on time throughout the year. Consider working with your tax professional to help project withholding amounts along with income forecasts to help dial in a more accurate withholding election.

Retirement plan contributions: Your new employer is likely to offer some form of retirement benefits. The time when you become eligible to enroll, contribute, and vest in any matching contributions will vary drastically from employer to employer and the type of plan. However, while determining how much to save is incredibly important when crafting a financial plan, it is also critical to understand where to save.

• Should you contribute to the traditional or Roth portion of your plan?
• How much does your company match and to which account?
• Does the new plan offer a mega-backdoor Roth option?
• Should I roll over my old retirement plan to this new plan or to my own IRA?
• What sort of investment options does my plan offer? Where do these investments fit into my overall goals and risk tolerance, and what are the fees of these investments?

Questions like these are something you should be thinking about when you head into benefits selections. Sometimes, your new employer may offer a retirement benefit that opens new planning opportunities, while other times, it may close planning doors that you have used in the past. Also, if you change jobs during the year, your deferral limit ($24,500 in 2026; limits may change year to year) and any applicable catch-up still apply. Your new job won’t be aware of how much you’ve already deferred, so it’s important to make sure you don’t overcontribute to your new plan.

After the dust settles, there are some other things to think about regarding your old employer or any money that may be ‘out there’ still.

• Old retirement plans – Consider the benefits of rolling these into either your new employer’s plan or into an IRA. It can be easy to forget about old retirement plans, and it may be helpful to review these soon after starting a new job. Of note, the Department of Labor has a lost and found website that can help you locate old retirement benefits you may have forgotten about. By inputting some basic information, the database will conduct a search for you to help find missing benefits. Keep in mind that this tool will only be able to find sponsored plans, such as a defined-benefit pension plan or defined-contribution plan. You can go to public resources such as lostandfound.dol.gov to learn more about how they can help find forgotten benefits.
• Old health savings account – If you have a health savings account, you may be able to roll this over into your new employer’s HSA, or you may want to roll it into another one that you maintain outside of your employer.
• Old stock plans – You may have an old employer stock plan or stock options that remain after you leave employment. Remember that, while you no longer work at your old employer, various options still have timeframes for exercising or maintaining their tax-advantaged status. Both stock options and equity compensation have various vesting and exercise schedules, so while you won’t necessarily make your career change decision based on this alone, it can help to understand your overall picture.

Career changes are exciting, but they also come with their own challenges. Try not to let your financial plan become an oversight during this process so you can keep your hard-earned benefits working for you.

If you’re about to make a career change or have recently started a new position, schedule a conversation with your Forum advisor. Working with a financial advisor during career changes can help you feel more confident about your long-term financial outcomes.