Changing Jobs? 16 Questions To Ask That Will Help Protect Your Financial Life

Recent research from the Bureau of Labor Statistics shows that the typical worker born in the latter years of the baby boom (1957-1964) changes jobs approximately 11 times in their lifetime. While many of these transitions occur at younger ages, there are impacts whenever there is a change. There are many areas to consider before transitioning jobs. I’ve found that some people focus on salary and benefits, while others focus on company culture, room for advancement, and other items. When my clients tell me that they are changing jobs, my initial considerations relate to the impact on their financial situation and future wealth accumulation. Changing jobs 11 times in your lifetime offers the possibility of an improved financial plan but it also presents 11 time periods where your finances are vulnerable.

To help you protect your finances during these periods of transition, I’ve included below questions for you to ask HR or your hiring manager before accepting that new position.

Health & Insurance Benefits

In the era of rising health care costs, many companies are moving towards transferring some of their traditional health insurance costs onto their employees. Companies can transfer this cost via higher employee contributions, higher deductibles, fewer plan options and less robust benefits such as disability insurance. Key questions to ask include the following.

• Available Insurance Carriers & their Networks
  • Are your current medical providers included in the networks available to you?
  • Are the plans PPOs or the more restrictive HMOs?
  • Are there waiting periods?
• Out of Pocket Costs: Insurance Deductibles, Co-pays & Maximum Costs
  • What are the co-pays associated for the type of doctors you are most likely to use?
  • What are the individual and family deductibles that you need to meet before your insurance company contributes? In the past few years, many people have been shocked by how much they have to pay before the insurance company pays anything. (You should factor into your decision any potential medical needs, such as an upcoming surgery or new additions to your family.)
  • What is the maximum out-of-pocket cost associated with each plan?
• Other Health-Related Benefits:
  • Does the company offer a Health Savings Account?
  • Do they offer Group Term Life Insurance and Disability Income Insurance?

Also keep an eye out for companies that augment their offerings with benefits such as Employer Paid Term Life Insurance and Disability Income Insurance. If you have pre-existing conditions, then group plans can be beneficial. Sometimes there is a small amount of no-cost term life insurance available, but usually these policies can carry some cost, and as such, you should discuss them with a financial advisor or professional. Note that if you are in very good health, you may want to explore a private policy as that may be less expensive.

401k, 403(b), SEP/Simple IRA Plans

Another significant benefit may be eligibility for a retirement plan such as a 401(k) plan (or a 403(b) plan which is very similar). If such a plan is offered, here are some key questions to ask about your unique situation:

• Waiting Period and Company Matches
  • What is the waiting period to join the company 401(k) plan?
  • Is there a company provided match and what is the matching contribution formula?
  • Are there any potential profit sharing contributions?
  • What is the vesting period of the employer contributions? A vesting period relates to the amount of time you need to be with the company before you have full rights to any company contribution. Some companies require you to be employed for a certain period before you fully vest into their contribution. Therefore, if you move around a lot you may be losing some of your accumulated benefits.
  • Are loans available? (Since I think borrowing from a 401(k) plan is one of the worst moves you can ever make, I hope the answer is no.)
• Investment Funds on offer & Stock Purchases
  • What funds and investment choices are available?
  • Are there lower cost index fund options available?
  • Do they offer a Roth 401(k) provision? This is especially beneficial for younger, lower earning workers.

I found an interesting source of information on Bloomberg.com that enables you to benchmark the 401(k) offerings of several of Americas largest companies. I encourage you to take a look. If you are considering a position at a smaller company that does not offer a 401(k) plan, ask if they can offer an alternative such as SEP or Simple IRAs. These plans are structured differently, but can contain some of the same benefits as a 401(k) plan.

Please remember that when you change jobs your finances also transition. While there may be some downside from waiting periods, and inferior plan offerings, etc., there may also be opportunities to have a fresh start with your retirement planning and perhaps improve your health care, life, and disability benefits. As always, if you’re in doubt, you should to discuss your job offer with your financial or career advisor to determine the overall financial impact.

Mark Avallone, MBA, CFP®, CRPS®. www.PotomacWealth.com

Securities and Investment Advisory Services offered through H.Beck, Inc., Member FINRA/SIPC. 6600 Rockledge Drive, 6th Floor, Bethesda, MD 20817 301.468.0100. Potomac Wealth Advisors, LLC is not affiliated with H.Beck, Inc.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Diversification and asset allocation do not guarantee against loss. They are methods used to manage risk.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
*The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Consult your financial professional before making any investment decision.

About Mark Avallone, MBA, CFP®, CRPS®, AIF®

Mark Avallone is the author of Countdown To Financial Freedom, and founder and President of Potomac Wealth Advisors, LLC a financial advisory firm serving clients through holistic financial planning and wealth management. Avallone writes on a variety of financial topics, and his contributions have appeared in the Wall Street Journal as well as in Forbes where he is a regular contributor. He is a frequent guest on CNBC, the Fox Business Network, and local NBC, CBS, and Fox affiliates in Washington, DC. His insights have also been published in USA Today, U.S. News & World Report, The Washington Post, and other leading publications   Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Potomac Wealth Advisors, LLC or CES Insurance Agency. www.finra.org and www.sipc.com This communication is strictly intended for individuals residing in the states of AZ, CA, CO, DE, DC, FL, GA, MD, MA, MO, NJ, NM, NY, NC, OR, PA, SC, TX, VT, VA. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services. Potomac Wealth Advisors, LLC, 15245 Shady Grove Rd., Ste 410, Rockville, MD 20850 301-279-2221

View all posts by Mark Avallone, MBA, CFP®, CRPS®, AIF®