Thought about quitting recently?
You’re not alone.
The average person changes jobs 10-15 times throughout their career, with an average of 12 job changes. Job pivots usually can be chalked up to more money, better benefits, a better opportunity, or better working conditions (such as boss, coworkers, etc.). Some people who change jobs just want a change of scenery. Others can’t stand where they’re at and need change for their mental and physical wellbeing.
If you’ve heard the term “great resignation” recently, or seen more people than usual putting in their two weeks, there’s a reason for it: COVID. Just like everything from the past year and a half, the global pandemic has changed the way we keep and search for jobs. In this case, we were statistically more likely to hang on to jobs we didn’t love rather than look for work doing the pandemic. Once the turmoil ended and the economy and hiring market began to come back, it was safer to cut ties and look for a new shore.
Of course, while there are many valid and good reasons for pivoting and transitioning from one job to the next, there are also bad reasons. There are also good and bad ways to go about such a change. Changing jobs can be stressful, financially difficult, and risky, career-wise. It isn’t something that should be done just to be part of a trend. It should be thought out and prepared for in advance, with plenty of time for both you and your (former) workplace prepared for the transition.
No matter what, exiting a job in a kind and courteous fashion is a must. It doesn’t reflect well to leave under poor terms, or with a negative reputation. You got this far in your job performing well, a few more weeks of it won’t kill you. Don’t take the time to air grievances with coworkers or your boss no matter how tempting that might be. Be professional when submitting your notice of resignation or notice. Give plenty of honest feedback if asked. Understand where you’ve been, where you’re going, and how the job overall benefitted you and your career. Take stock of everything for the good of your health and your career.
While it is customary to give a notice of two weeks for vacating a job position, some places require more. Be aware of what’s in your contract if you have one, and be aware of other factors, such as the unique necessity of your job. If, for instance, you’re in a specialized field such as medicine or law, more than two weeks is not only generous, it’s good form. Any industry with clients and customers in need of your services should be given more time to prepare for a replacement to ensure a smoother turnover. It’s good courtesy to the people you’re taking care of.
If you’ve given your notice, no matter the time, then the other elements begin to get factored in. Are you bound by a non-disclosure agreement (NDA), or a non-compete clause? If so, be aware of the wording and legalities involved in your contracts. Some NDAs have more stringent requirements than others, and many non-compete clauses vary in both what counts as competition and the length of time under which the contract applies. State regulations and precedent influence the non-compete clause, so be aware of local statutes before making any career moves that would potentially violate it.
Some states have very narrow non-compete terms, such as brief lengths of time (between a few months and a year) and specific definitions, such as allowing a company in a similar or even the same industry but not by taking clients from the previous job. Some places have multiple years attached to the non-compete period, though they become more and more difficult to enforce the longer the time period is. Be aware, and make sure and talk it through with a lawyer before attempting a career change that would in any way violate NDAs and non-compete agreements.
While it’s a great idea to have another job lined up before you exit your current one, that is admittedly not always possible. If you’re exiting without a new job lined up, there are a few things to pay attention to.
The largest is finance.
You’ll need a healthy amount in your savings to support yourself during lean periods that might occur during the job hunt. Bills add up, and that final paycheck is a steep cliff that comes up quicker than you might expect. Budget and plan accordingly for a few weeks (to possibly months) without an alternate income source. Make sure you can pay for necessities and your quality of life comfortably. Make sure you have financial affairs in order and don’t get saddled with debts or payments that derail budgetary plans. Don’t spend outside your means, even to celebrate your career change. Remain vigilant about your finances.
If you have a spouse and dependents, make sure they’re aware of the financial obligations and burdens that may come along with this move. While many parents both have careers, women were disproportionately affected by the pandemic in terms of employment. Women who left to have children often found that this set their career and earning potential back quite a bit when they tried to return to the job market. While it’s unfortunate, factor in such societal considerations before putting a job on hold or leaving it entirely. Ensure you can cover your finances and your career potential no matter your moves and choices. If your new job requires you to move, then that opens all new financial considerations.
Even if your spouse has a good job that’s secure, factor in the decreased income into your monthly budgets. Consider what your absence of income means for both your retirement savings and other savings expenses, such as college for your kids. It can be stressful for one spouse to be the provider during these lean times, so prepare financially as best you can and ensure you’re both onboard for this type of pivot. Try to realistically factor in everything that will be involved to make it work.
Many places provide benefits that employees come to rely on, such as health care, dental, retirement, pensions, 401(k), or a life policy. When you leave a job, those benefits end. If you have a medical condition that requires health insurance, be sure to have another option lined up or else finances in place to cover what you’ll need. Consider enrollment and plan benefits carefully before picking one. The same goes for dental. If you need consistent care, you’ll need to stay on top of this to ensure you don’t miss the appointments you require.
When leaving a job with a 401(k) plan, you have several options:
- Keep the 401(k) with your former employer
- Consolidate your 401(k) into your new employer’s plan
- Cash out your 401(k)
- Roll the assets into an Individual Retirement Account (IRA) or convert to a Roth IRA
You’ll have to decide which option is the best for you based on your goals and needs. Your financial advisor or planner can assist with this as well, as it can often be a delicate balance to find the right path. Each choice has different benefits and drawbacks. You can keep your 401(k) with a former employer or move it to your new employer plan. You can also roll it to an IRA. You should weight the benefits and drawbacks of each option.
The one thing to remember, no matter the option you’re choosing, is that cashing out the 401(k) should be considered your very last choice. There are steep tax penalties for cashing out, and they only get steeper if you’re under 55 years old. There can be a penalty for taking early withdrawals before retirement age. It’s usually a 10% penally for under age 59.5 (in some cases age 55. Also, in the case of SIMPLE IRA’s can be up to a 25% penalty. In addition, you are taxed on the 401(k) withdrawal as though it is income. Cashing out should only be done in emergencies, such as if you were laid off or have a major medical expense that requires funding immediately. If cashing out for an emergency is necessary, it’s wise to only cash out the amount you need. Be sure to talk with a financial advisor and tax advisor before cashing out any part of a 401(k).
For higher-level career changes, ensure your stock options or financial incentives based on company performance remain valid. Check your contract carefully to see what options you have both for retaining and buying stock, or if you have other financial incentives that are affected or even penalized by your career change. Stock options in companies can provide great retirement nest eggs down the line and help diversify an investment portfolio.
If you’re thinking about pivoting jobs, you’re far from alone. But if you’re planning it the right way and being responsible, then you’re more unique than you should be. Many people don’t take all the factors into account before changing jobs. Often, it’s a quick turn or a decision made on the fly. It’s always best to think ahead, plan, prepare, and budget for whatever you want to do. You may only think you’ll be on the job market for a week or two, but landing the right job or career can take weeks, even months. You need to be able to, at minimum, cover your living expenses during this time. This will require savings, budgeting, and plenty of attention to financial detail.
If you do decide to change jobs and have reasoned it’s in your best interest while preparing responsibly, then go for it. Many people find their new job makes them happier than their old one. Moving upward is always possible, and evolving in your career can have a special joy that’s worth pursuing. Job satisfaction is an important life factor that we should highly value. Don’t forget to believe in yourself, and believe in your job prospects. Believe you’re worth what you want, and don’t stop looking for the best path for yourself.
