Millions of people quit their jobs every month in what many have dubbed the “big quit.”
Before you join the massive job exodus, do a thorough analysis of your financial situation.
This, of course, means taking a hard look at your spending habits and any savings you’ve accumulated – you need at least a little cover to move from job to job.
It also means taking inventory of everything your employer currently subsidizes. Things like health care, retirement savings, benefits, and stock options, which you can buy back when you leave.
“People know they’re walking away from a paycheck,” says Eric Roberge, certified financial planner and founder of Beyond Your Hammock, a financial planning company in Boston. “But they often forget to consider their benefits.”
Use this financial checklist to make sure you don’t leave money on the table when you quit your job.
USE YOUR FSA: Flexible spending accounts don’t go from job to job. You usually have to use the funds before you quit or lose that money altogether.
With FSA healthcare accounts, you can use the total amount chosen, even if you have only contributed part when you leave. With dependent accounts, you can use what you’ve contributed up until your last paycheque.
Most FSA plans offer a grace period, allowing you to submit claims after you leave. But you’ll only be reimbursed for eligible expenses made on or before your last day, so stock up on cold medicine, hand sanitizer and ibuprofen before you quit.
There is one exception: if you opt for COBRA coverage (more on this below), you may be able to keep your healthcare FSA. If you choose this route, you will continue to make contributions, in addition to paying FSA and COBRA administration fees.
SPEND UNUSED BENEFITS: Did you pay pre-tax dues for parking or public transportation? Use these funds before your last day or you risk losing them forever.
RECHARGE PRESCRIPTIONS: If you have health insurance through your employer, take care of all routine medical appointments (and non-routine things you’ve postponed) before your insurance ends.
The end date of your employer-provided plan depends on your employer, although it is usually the last day or the end of the calendar month in which you left.
SICK LEAVE SURVEY: Companies differ on how they handle accrued vacation and sick time. Some will give you a check for unused vacation when you leave. Others will pay a fixed number of hours (up to 20 hours, for example). With others, you lose any unused time when you quit.
Find out about your employer’s policy before you put in your notice and use the time you won’t get paid when you quit. You’ve earned your vacations and sick days, so don’t leave time or money behind.
Don’t risk being discovered between jobs. Evaluate your health insurance options and choose a plan that’s right for you.
You may also have the option of continuing your employer insurance but paying the full premium, for up to 18 months through the Consolidated Fiscal Reconciliation Act, better known as COBRA. You can also jump on your spouse’s plan or sign up for a new one through the health insurance marketplace. (Leaving your job is considered a qualifying life event.)
401(K) RESEARCH FEE: Make sure you’re familiar with plan options with your employer’s 401(k), and any associated fees, so you can decide what to do with your account when you leave.
You can choose to leave your 401(k) where it is, but that should be an intentional choice, not the default. If you have a new job planned, you can join your new employer’s plan (if they offer one).
“Pay attention to the fees in each 401(k) and the different investment options to decide where it makes sense to keep your money,” says Elliott Appel, founder of Kindness Financial Planning in Wisconsin. “Another option is to turn it into an IRA, where you can choose the investments and minimize the costs.”
LEARN ACQUISITION CALENDARS: Some companies use a vesting schedule to distribute benefits such as stock and pension plan contributions. Leave the company before you’re 100% acquired and some, if not all, of that money could go back to your employer.
Before submitting your review, check to see if you are fully onboard. If you’re not, take note of your next acquisition step and how much money you’ll lose if you leave before then.
“It’s imperative to know what you might be leaving on the table so you can weigh the cost against the benefit,” says Ashlee deSteiger, founder of Gunder Wealth Management in Michigan.
You can choose to stay a week, a month or a year longer to gain full ownership of your vested benefits.