Financial Focus: Anticipate before joining the “Great Resignation” | Local News
This has been called the “great resignation” – the large number of Americans voluntarily leaving their jobs. If you are planning to be a part of it (ideally with another source of employment in sight), you will need to take the necessary financial steps to keep moving towards your long-term goals.
Here’s a bit of background: After a year in which the pandemic took so many out of their jobs, the economy is reopening, but the “exit rate” – the number of jobs people have voluntarily left. – broke records. Some economists say this high quit rate is because people are confident they will get better jobs, with higher pay and more flexibility to work from home, or because they are preparing to start their own. business or join the odd-job economy.
If you are considering joining this temporary labor market migration, how can you ensure that you will be financially stable and that you can continue to make progress towards your long term goals?
Your first step is to take a clear look at your financial situation. As mentioned above, it is best to have a new job on hand before you quit your job. Alternatively, maybe you have a spouse or life partner who earns enough to support both of you, or you’ve built up an emergency fund that gives you a cushion.
However, if your short-term income is less than what you earned before, or if you have to go without a salary for a while, could you still pay your bills? If you are strapped for cash, you might be tempted to dip into your 401 (k) pension plan or other employer sponsored pension plan. But this move will usually result in taxes and, if you’re under 59 1/2, a 10 percent penalty as well. For this reason, and because your retirement accounts are designed to be a financial resource after you retire, think twice before dipping into those funds if you leave your current employer.