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Life events

Changing Jobs

There are many good reasons to change jobs. Before you make the exciting transition into a new job, be sure you're prepared for whatever opportunities await.

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According to the U.S. Bureau of Labor Statistics, how many jobs do Americans (ages 18 to 52) hold on average?

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Americans hold an average of 12 jobs from ages 18 to 52, with nearly half of these jobs held before age 25.

More than that

Americans hold an average of 12 jobs from ages 18 to 52, with nearly half of these jobs held before age 25.

Source: U.S. Bureau of Labor Statistics, August 31, 2021



Before you move jobs

You'll want to think about your cash flow needs, especially if you resign without another job lined up. Make sure your cash reserve and emergency fund are in good shape. It's important you remain current on all your bills so you don't damage your credit.

Be prepared before you begin

Meet with the human resources department at your old job and your new one for a smooth financial transition.

1. Find out what you may be entitled to when you leave your old job

  • Are you owed any accrued commissions or bonuses?
  • Do you have unused sick or vacation days?
  • Will you receive any severance salary?

2. Gain a complete picture of your new benefits

  • How do they stack up against your old ones?
  • Should you supplement anything that’s missing?
  • When will your insurance coverage kick in?
  • How soon can you participate in your new company’s retirement plan?

The 411 on 401(k)s

If you have a 401(k) account with your current employer, you have choices with what to do with the account.1

Leave the account with your former employer2
This requires little or no effort on your part. One downside is that you may lose track of the account as you change jobs over your career and miss out on making investment decisions.

Roll the balance into a 401(k) with your new employer
If permitted, this is one way to keep your funds consolidated.

Roll over to an Individual Retirement Account (IRA) or convert to a Roth IRA
If you are looking for broader investment options, or wish to convert your funds to an IRA, then moving the 401(k) funds into a traditional IRA or Roth IRA may make sense.

Take a cash distribution for the account value
Taking a lump sum distribution that is not rolled over into another plan or an IRA enables you to re-invest or spend the funds as cash, but you need to be aware of potential tax implications and penalties. 3

Four steps for a 401(k) rollover 4

The key to any type of tax-free movement of your 401(k) funds is a direct rollover. This means the 401(k) trustee from your former employer moves the funds directly to the new account.5

  1. Enroll or open a new account
    Enroll in a 401(k) or open an IRA with your new employer. In either case, be sure to complete the necessary forms with your old employer to have funds transferred from your 401(k).
  2. Choose distribution options
    Choose correct 401(k) distribution options on the old employer's distribution forms. This allows for a trustee-to-trustee transfer.
  3. Review your investment choices
    Once the funds have been received into the new account, review the investment choices and select the investments you determine could help meet your future goals.
  4. Designate beneficiaries
    This is a good time to reconsider whom you designate if you've had any recent life changes, such as an addition to your family, marriage or divorce.

Maintaining health insurance

Minimize any gap in health insurance coverage. Your current employer's coverage may end on your last day of employment or the end of the calendar month. New employment coverage often starts the month after you begin your job. So, if you arrange to start at the very end of the month, you may have a gap of only a few days.

If you've lost your job, there are two important laws that come together to protect you:

The Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA allows you to pay the premiums and continue to participate in your former employer's group health insurance plan for up to 18 months. A government subsidy may be available to cover a portion of the cost, but be prepared to pay for the full cost yourself. Whatever you do, don’t let your coverage lapse.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA)

HIPAA prevents your new employer from excluding you from coverage for a pre-existing health condition if you have not had a break of more than 63 days in your coverage.6

Know the hidden costs of relocation

Relocating can be exciting. If your new job requires you to move, keep in mind that there are other costs you may need to factor into your budget. These may include: an increased cost of living, commuting costs, increased state and local taxes, etc.

You can calculate and compare the cost of living between two cities at websites like (March, 2018).