Thinking of quitting your job?

Be sure to tie up your loose financial ends before you make any big moves.

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Key takeaways

  • Before you make up your mind to quit, think through your real reasons for doing so.
  • Consider exploring whether a raise, a new role, or a sabbatical might change the way you feel about your current job.
  • Make sure to evaluate the full compensation package of a new job, instead of only focusing on salary.
  • Don't forget to wrap up any outstanding expense reimbursements and spend down any money remaining in a flexible spending account (FSA) before your last day.

If there's one thing we could all use after being stuck in our homes for so long, it's a change of scene. As the wave of "Great Resignations" shows, many people are deciding right now that they need a change in how they spend the hours of 9 to 5.

Change can be refreshing and energizing. But before you hit "send" on that resignation letter (or perhaps, even before you make up your mind), take a moment to think through a few financial nuts and bolts of your decision.

Here's what you should be considering at different steps in your decision-making process.

Step 1: Before you make up your mind to leave

Maybe you're feeling stuck or unhappy in your current position, and you're starting to get serious about making a move. Before you commit to leaving, back up your thinking and spend some time exploring the real reasons why you think you need something new.

Are you feeling undervalued, and looking for a bump in compensation or recognition? Are you feeling bored and in need of a new challenge? Are you dreading going back to the office, and hoping for a new fully remote role? Or are you just feeling burnt out—and in need of a real break from the daily grind?

Whatever your reasons, consider (respectfully) raising your needs with your current employer. See if they're willing to work with you to find a way for you to stay (and feel good about staying). After all, many employers are having a hard time finding skilled employees right now, and many managers understand that we're all a little fried after the last couple of years. A raise, promotion, new role, remote role, or sabbatical might be more in reach than you realize. But you'll never know if you don't ask.

Step 2: Before you accept an offer

So you've found a new opportunity that you're feeling pumped about, and you have an offer in hand. Hopefully, it even comes with a nice boost in pay.

Before you get too dazzled by that salary figure, however, pause to think about how the move would affect your finances in total. A higher pay number might be misleading if you'd be moving from an employee role to a contractor role, or if you'd be relocating to a more expensive area. And salary may be only one part of each role's total compensation package, which might also include bonus or stock compensation potential, matching retirement contributions, insurance, or even tuition or childcare assistance. (Read more about evaluating a job offer.)

Fidelity's job offer evaluator tool can help you better understand how the new job and your current job compare on total compensation (even factoring in differences in the cost of living of different areas). Consider running the numbers carefully before you make a final decision, or even using the results to give yourself added leverage as you're negotiating.

Step 3: Before you set your last day

You've accepted an offer, and you're looking forward to those greener pastures you see up ahead. Once again, consider taking a beat before you finalize your exit plans, as setting your last day strategically might help you maximize your benefits. In particular, look into the following:

  • Bonus dates—Employers often have a set policy that determines when a departing employee will or won't still be eligible for a bonus, like a date that you must still be employed through.
  • Vesting dates—Typically, if your employer makes matching contributions to your 401(k) or other retirement account, that money isn't yours right away—you have to stay employed for a period of time for it to vest. You might also have vesting dates to consider if your employer offers stock or stock-like compensation, like stock units, stock options, or profit sharing.
  • Vacation policy—Like other benefits, policies on unused vacation days can vary pretty widely. But take a moment to check on whether you might be reimbursed for unused vacation days, or if it makes sense to take a few vacation days before your last day.
  • Health insurance coverage—You'll want to avoid gaps in your health insurance coverage, so make sure to check when your old coverage will end and new coverage will begin. (Your old coverage might end on your last day, or might extend through the end of the month you quit in, even if you quit on the first day of the month.)
  • Any benefits you might need to repay—If you received a signing bonus or had your relocation expenses covered when you started at your new job, then be extra careful in setting a last day. Some employers require you to repay all or a portion of these benefits if you quit before you reach a year of employment or other work anniversary.

If you have any doubts about your old or new employer's policies, find someone in HR who can answer your questions (or point you in the right direction). You might find that you're still going to miss out on some benefits, even after finagling your last day, or decide that leaving sooner is still worth it for you. But at least you'll be making a fully informed decision.

Closing a health insurance gap

If you're facing a potential gap in health insurance coverage—whether for a brief period between jobs or for longer, you have 3 main options to consider:

  • Gain coverage through your spouse's employer. Leaving a job typically counts as a "qualifying life event," which means you should have a window for one or both of you to sign up for coverage with your spouse's employer.
  • Elect COBRA coverage. COBRA lets you stay on your old employer's health insurance for a period of time (often, up to 18 months). However, it can be an expensive option because you typically have to pay the full monthly premium yourself (instead of your employer picking up part of the tab). Your old employer is obliged to send you paperwork on enrolling in COBRA shortly after you leave, so it can be a pretty light lift to sign up. But you should still check with HR for details if you're planning to enroll.
  • Shop around for a policy. You can buy a policy for yourself through the public marketplace (i.e., the marketplace established by the Affordable Care Act). Some people even qualify for government-provided subsidies for these plans, through premium tax credits. Another option is to look to your local health insurance agent, trade or professional associations, and other so-called "private exchanges" that offer plans from multiple carriers. (You may have more plan options available to you through these outlets, but no tax credits are available.)

Step 4: Before your last day

You're busily finishing up projects, developing transition plans, and making the rounds at farewell happy hours. But make some time also to tie up any financial loose ends at your old job, like outstanding reimbursements for expenses, tuition, or childcare you may still be entitled to.

This can be a good time to make plans for any retirement or other accounts you opened through your old employer (see the box below for more details). It can also be a good time to get to any medical appointments on your to-do list. After all, you'll soon be busy with a new job (plus potentially a new insurance network and new deductibles to consider).

What happens to old accounts when you quit?

If you have any of these account types with your old employer, you may need to make a plan for them when you quit. Here are the basics of what you need to know (but always check with HR for your employer's specific policies):

  • 401(k)—Your options may include leaving the money in your old employer’s plan, rolling the money into an IRA, rolling it into your new employer's plan, or even withdrawing the money (in which case you’ll potentially face taxes, plus a penalty if you’re under the age of 59½). Check with HR at both employers to confirm your options, and think about the tradeoffs of each choice .
  • Health savings account (HSA)—You may be able to leave the money in your old account or roll it over to a new HSA provider. Check with HR for details. But that money is still yours even if you leave your job, so there's no rush to spend it (though you won’t be able to make additional contributions if you’re no longer covered by an HSA-eligible health plan).
  • Flexible spending account (FSA)—This money is use-it-or-lose it, meaning any money left in the account when you leave is generally forfeited back to your old employer. Check with HR for the exact details of your plan, but you might want to hurry up and spend down your balance (making sure you’re spending it on qualified medical expenses) before your last day.

Step 5: On and after your last day

You're firing off your last emails and riding off into the sunset. Even if you're crying "good riddance" inside, make sure to leave on a positive note. Reach out to the people you've worked with to tell them about your move. And make sure your goodbyes are gracious and appreciative.

Careers are long, and you never know when you might cross paths with someone again or end up needing a reference. Burning bridges only means you'll have fewer paths open to you in the future, so leave them standing strong.

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