It\u2019s been called the \u201cGreat Resignation\u201d \u2013 the large number of Americans voluntarily leaving their jobs. If you plan to be part of it (ideally with another source of employment lined up), you\u2019ll need to make the financial moves necessary to keep making progress toward your long-term goals.<\/p>\n\n\n\n
Here\u2019s some background: After a year in which the pandemic caused so many people to lose their jobs, the economy is opening back up, but the \u201cquit rate\u201d \u2013 the number of jobs people have voluntarily left \u2013 has been breaking records. Some economists say this high quit rate is because people are confident of getting better jobs, with higher pay and more flexibility to work at home, or because they are preparing to start their own business or join the gig economy.<\/p>\n\n\n\n
If you\u2019re thinking of joining this temporary migration from the workforce, how can you help ensure that you\u2019ll be financially stable and can continue to make progress toward your long-term goals?<\/p>\n\n\n\n
Your first move is to look clearly at your financial situation. As mentioned above, it\u2019s best to have new employment in hand before you quit your job. Alternatively, perhaps you have a spouse or life partner who earns enough to sustain the two of you, or you’ve built up an emergency fund that gives you a cushion.<\/p>\n\n\n\n
However, if your short-term income is less than you previously earned or you need to go without a paycheck for a while, could you still pay your bills? If you are strapped for cash, you might be tempted to tap into your 401(k) or other employer-sponsored retirement plan. But this move will generally result in taxes and, if you are younger than 59 \u00bd, a 10 percent penalty as well. Because of this, and because your retirement accounts are designed to be a financial resource after you retire, think twice before dipping into these funds if you leave your current employer.<\/p>\n\n\n\n
If your employer allows it, you can leave your money in the 401(k) so you’ll still be accumulating resources for retirement. You also have the option to roll those funds into an individual retirement account (IRA) or a new employer’s retirement plan.<\/p>\n\n\n\n
And if you plan to work for yourself as a freelancer, consultant or business owner, you\u2019ll still want to save toward retirement. Possible retirement plans for the self-employed include an \u201cowner-only\u201d 401(k), a SEP-IRA or a SIMPLE IRA, all of which may be relatively easy to establish and offer tax benefits. A financial advisor can help you find a retirement plan that\u2019s appropriate for your needs.<\/p>\n\n\n\n
Here\u2019s something else to keep in mind \u2013 an emergency fund. As mentioned above, if you already have one, you’ll have some breathing room if you\u2019re thinking of leaving your job and might have a temporary gap in income. But as the name suggests, an emergency fund is there to help cover unexpected costs, such as a major home repair, without forcing you to take out a loan, or cash out part of your longer-term investments. So, if you are planning to tap your emergency fund, work to restock it as soon as possible.<\/p>\n\n\n\n
If you\u2019re participating in the \u201cGreat Resignation,\u201d it means you\u2019re feeling positive about your future employment prospects, which is great. But you\u2019ll want to support that optimism with a strong financial foundation.<\/p>\n\n\n\n
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.<\/p>\n\n\n\n
Edward Jones, Member SIPC<\/p>\n","protected":false},"excerpt":{"rendered":"
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