Episode 41: Things to Consider When Starting a New Job
Jun 15, 2023
As many of you may know, the job market can be very competitive. If you’re fortunate enough of find yourself in a position to start a new job, there are a number of things to keep in mind that could impact your income, budget, and benefits. On this episode of Wright Money Tips, Isaac Wright, CFP®, ChFC® and Aaron Reed, RICP® share several helpful tips that you should consider if you’re transitioning into a new job that could help you achieve your financial and lifestyle goals.
Here are just a handful of the things that we'll discuss:
- Employer benefit packages
- Life insurance plans
- Income changes and how that impacts your budget
- The fundamentals of financial planning
Isaac Wright: Well, thank you for tuning in to Wright Money Tips. I think this episode is going to be a nice episode. The reason for this is because there’s a lot of people right now, when you come out of COVID, a lot of people have changed jobs.
As you know, the job market in general is very competitive. And if you’re either fortunate or maybe find a situation where you’re in a new role, a new job, a new position, there’s a lot of decisions sometimes that come with the transition of going from one job to another or just outright taking a new job.
Aaron, I think that’s going to be a great conversation for us today and let’s talk a little bit about that transition. Aaron Reed is one of our lead advisors here at Financial Dynamics.
You know Aaron, over the last couple years, we’ve really seen a lot more people have this type of situation where they’re taking on a new role, new responsibilities, hopefully getting paid better, but regardless of that, let’s start off by what do we need to consider when we’re starting a new job.
Aaron Reed: Yeah. Thanks for having me, Isaac. Obviously, a lot to unpack there. Probably the first thing that’s going to be on people’s minds when they get a new job is what kind of benefits am I going to have access to?
Isaac Wright: Yeah, that’s true.
Aaron Reed: You know, there’s a lot of things that are going to go on, but that’s probably going to be the first and foremost thing. Do they have a 401(k), a simple IRA? You know, what type of options do you have available? And they’re all similar, but they also have different nuances and different rules about them and how you may be able to use them to accomplish your goals.
So that’s going to be one of the biggest things is understanding what kind of benefits you’re going to have. You know, insurances, life insurance is a big thing that a lot of people have through their employer. And when you switch, a lot of times that’s going to change. So just understanding what’s available to you and what you can take advantage of and what you may want to opt out of.
Isaac Wright: You know, as I hear you say this, so basically when it comes down to changing jobs, if you think about this. If you’re changing jobs and you have insurance decisions, retirement account decisions, figuring out not what you’re just going to do in terms of what you have with the new job, but if you’re coming from an old job, making sure that transition is smooth. Not necessarily something I would depend completely on an HR department for.
Aaron Reed: Sure.
Isaac Wright: I know we do a lot of work when it comes to helping families make better decisions, especially with old 401(k)s, retirement dollars, but even with health insurance and some of those transition points. You and I have been on the phone with HR departments with our clients because it can get confusing.
Aaron Reed: Sure.
Isaac Wright: And sometimes they don’t want to make a bad decision. So for all of you paying attention, listening to this, if you are in a place where you’re recently taking on a new role, new job or responsibilities before we get to the income side, the benefits in my opinion, I think are the number one thing most people have more questions about than anything else.
Aaron Reed: Yeah, for sure.
Isaac Wright: So, you know, again, if you have any concerns about taking on a new role or if you have a new benefit package or being offered something new, give us a call. Let us know. That’s what we’re here to do.
Let’s maybe move to the other side of the fence. Let’s say benefits are squared up. But let’s say on a positive front, maybe somebody’s taken on a new job with a lot higher income or that situation. What do we look at there?
Aaron Reed: Sure. You know, one of the basic fundamentals to any good financial plan is going to be some type of budget that you at least make an attempt to stick to. So when you take a new job, whether it’s hopefully you’re getting an increase in your income.
Isaac Wright: Yeah.
Aaron Reed: But sometimes somebody might be phasing out or you know, getting closer to retirement, or slowing down. So maybe they had a reduction in income.
Isaac Wright: That’s a good point.
Aaron Reed: But either way, your income’s probably going to change. So revamping that budget and just making sure that you’re conscious of where your dollars are going is going to be something important.
And it kind of ties back into benefits too, because most likely, your health insurance plan may be similar, but it’s probably going to be different. You’re going to have different costs associated with it, and that’s going to factor into your budget differently. So even if your salary stays the same, you still may need to go back and take another look at your overall expenses month to month, day-to-day.
Isaac Wright: Well outside of the budget too, dependent upon the income. And I agree with you because, I mean, I’m sitting here making a positive that maybe you have an increase in income, but quite frankly, sometimes it’s a decrease.
Aaron Reed: True.
Isaac Wright: But whatever that is, is also evaluating how much money you’re putting into your retirement plan. And if you do have a big increase in income, maybe you’re in a different tax bracket. Maybe looking at moving money into a Roth option within your retirement plan versus just putting it all tax deferred. Or maybe just adding more money as I’ve talked about a couple shows ago about the new SECURE Act. There’s a lot more money you can put into retirement accounts based on age and kind of the stage of where you’re at as well.
So also if you’re having an income change. Let me just kind of slow down here. If you’re having an income change up positive, maybe negative, dependent upon if you’re stepping back from an old job or a situation where you’re getting closer to retirement, all of that we just covered is going to be very important to you. Understanding your expenses again is going to, maybe something you can look at if you have extra money available as looking at how much money you’re putting into retirement plans. Or if you’re having a reduction of income, maybe looking at reducing the amount you put into your retirement plans if you’re in a low tax bracket and you may need that money or maybe go ahead and take it now versus later.
Those are all going to be very important discussions for you to make a better educated decision. You know, Aaron, outside of that, we’re sitting here talking about investments and retirement and all the above. Anything else you want to add to somebody that’s considering or having a situation where they’re changing over from a job?
Aaron Reed: You know, those are the big things. I know we mentioned benefits, but you know, it’s just fundamentals of financial planning.
Isaac Wright: Yeah.
Aaron Reed: One of the most important pieces of a financial plan is you, the client, and your ability to produce an income. Most likely your life insurance benefits offered by your new employer are going to probably be different. Your disability insurance is, is probably going to be different. And those are the two fundamentals. If you get hurt, disabled, and you can’t produce an income, then nothing else matters. So understanding how they compare and not necessarily how they compare, but just what are your needs now and are you able to meet them through your employer’s plan? That, I would say, that’s probably the most important thing.
Isaac Wright: Well, you know, so for all of you if you have insurance benefits that need to be evaluated on a job change, Aaron said something that triggered a thought for me, is if you do change jobs and you have a reduction of income, you may already have significant money saved in your retirement accounts that you need to figure out how to take best withdrawals from. To be able to match up to your budget as well.
That’s kind of what I call that semi-retirement type of scenario, maybe before you move into full retirement. So, it really does come back to financial planning. A lot of people sometimes think a financial planner is nothing more than pick, you know, find me a hot stock there, chief. Well listen, there’s a lot more to it than that.
So, nothing long-winded today. Wanted to hit home with you though about the fact that we’re finding a lot of people more than I would say in my 20 plus years, but overall, the last couple of years have seen a tremendous amount of job change.
Aaron Reed: Absolutely. It’s very common now. More than I feel like it used to be. People used to stick at the same job for 20, 30 years, and that’s a lot more rare now. People want to advance, you know, try to increase their income and it’s normal now.
Isaac Wright: Or start their own business.
Aaron Reed: Yeah. Whatever the case may be. It’s normal for people to change jobs more frequently, I think now than it was years ago.
Isaac Wright: Just remember this, guys. If you’re going to start your own business, if you’re changing jobs, and you have to evaluate both your benefits and your compensation relative to what’s available to you to maximize that amount of money, give us a call. Reach out to us here again, Isaac Wright, Aaron Reed, Wright Money Tips. We look forward to talking to you soon. Have a good day.
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Advisory services offered through J.W. Cole Advisors, Inc. (“JWCA”). Financial Dynamics & Associates, Inc. and JWCA are unaffiliated entities.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.