RALEIGH, N.C. – First there was one. Then, collectively, more than 38 million Americans quit their jobs in 2021, according to the Bureau of Labor Statistics. The walk out so great, it’s been coined The Great Resignation.
What You Need to Know
More than 38 million people quit their jobs in 2021, coining the term The Great Resignation
North Carolina ranks ninth in the nation for the highest rate of resignation, according to a 2022 WalleHub study
If you’re considering quitting your job, follow the tips and dodge the mistakes listed below
The quitting has continued into 2022, with North Carolina placing ninth in the nation for the highest rate of resignations, according to a recent WalleHub study.
If you’re considering a career switch, there are a lot of financial factors to keep in mind.
Spectrum News 1 spoke with Anne Lester, the former head of retirement solutions at JP Morgan Asset Management who founded the Aspen Leadership Forum on Retirement Savings in partnership with AARP.
First, Lester recommends having three to six month’s worth of income saved up.
“Think about your cash flow. Have you saved up enough to tide you over for that job search? On the one hand, there are plenty of signs for help wanted everywhere,” Lester said. “On the other hand, it might take a little longer than you are planning to find that next job.”
She says the second thing to consider, is if you will be walking away from your health insurance.
“If you’ve got workplace health insurance and you quit, you’ve got to think about where your health insurance will come from. If you extend your health insurance through your employer, if they even let you through something like COBRA, it’s going to cost you more money,” Lester said.
Then there’s often 401 K and retirement plans to contend with.
“You don’t want to ignore or forget. You want to have a strategy for maintaining those retirement savings if you’ve got them, because they’re worth so much to you in the future. ... That money will really add up.”
A big mistake people make is cashing out a 401K check from their company. If you spend it, you will owe both income tax money and a 10% tax penalty for spending retirement assets before you’re 59 and a half.
Many employers allow workers to transfer their old 401(K) savings into a new 401(K) plan, which Lester says is a good idea if the new plan offers solid, low-cost investments or low-cost target date funds.
Another option to consider is rolling up your savings into a new or existing IRA account.
But, if you can, avoid cashing out a 401(K) check from your old employer. While tempting, Lester says that can be a big mistake.
If you spend it, you will owe both income tax money and a 10% tax penalty for spending retirement assets before you’re 59 and a half.
“That’ll wipe out maybe half of what you’ve got,” Lester explained. “I actually made that mistake myself in my twenties, and let me tell you, it was super painful, super painful."