Layoffs Bring Woes or Opportunities

In the past few months, we’ve been living in uncertain times, with tech layoffs impacting tens of thousands nationwide. According to state data, from startups to large companies like Amazon and Google, no one has escaped unscathed – especially California-based employees who have felt up to 10,000 job losses – undoubtedly a tough time for all involved. Silicon Valley has taken that “one, two punch” with recent bank failures and more layoffs coming from Meta.

Hopefully, better days are on the horizon soon and comments from the President and CEO of San Jose’s Chamber of Commerce remind us that Silicon Valley consists of one of the most concentrated areas of highly educated individuals and venture capitalists in the world. Meaning, while the gloom currently looms, we know that our community is resilient.

And although changing jobs, while stressful, can also be an exciting time – bringing opportunities to explore new interests, grow professionally, and even move your career forward more rapidly. One thing not to be overlooked is the financial considerations associated with a job change, from evaluating your new salary and benefits package to managing your retirement accounts left behind. This blog will explore critical questions and answers that can impact your financial wellness when changing jobs, whether planned or unplanned.

What are the financial implications of changing jobs?

The most significant financial implication of changing jobs is the impact on your income. Your new salary and benefits package may differ significantly from your previous job, which can considerably affect your overall financial picture. It’s essential to carefully evaluate your new job offer, including salary, benefits, and other compensation and perks, to ensure it aligns with your overall financial goals – not just the cash coming in the door. Often overlooked is the impact on your retirement savings. If you were enrolled in a retirement plan with your previous employer, you would need to dig deeper into the nuances of your past employer’s plan, including things like the vesting schedule, matching rules, and investment options. Work with a financial advisor to determine what will happen to those funds. Some options may include leaving the funds where they are, rolling them over to an individual retirement account (IRA), or rolling them into your new employer’s retirement plan. If you choose to roll over your funds, it’s essential to carefully consider the fees and investment options associated with the new account.

What should I consider when negotiating salary?

Negotiating salary can be crucial to changing jobs, as it can impact your long-term financial wellness. It’s important to do your research and understand the market value for your skills and experience and the salary range for similar positions in your geographic area – especially if you’re considering a relocation.

In addition to your actual salary, other aspects of compensation may be negotiable, such as signing bonuses, equity packages, stock options, and other perks or benefits like medical benefits, life insurance, retirement plans, and even things like pet insurance. It’s important to consider all aspects of the compensation package when negotiating salary to ensure it aligns with your financial goals and nets your desired outcome.

About 70% of employers say they are willing to negotiate a compensation package, yet only about 55% even ask. So, when that job offer comes in, ask for what you need, and don’t leave valuable long-term dollars on the table.

What should I consider when evaluating benefits?

When evaluating the benefits discussed above, think about the cost and value of each benefit. For example, a lower-cost health insurance plan may have higher deductibles and copays, while a higher-cost program may offer more comprehensive coverage. Your new employer may offer scheduling perks that could make a significant difference to your lifestyle; think about how much time and stress you would save if flexible hours, work-from-home opportunities, or any other kind of perk were available. These benefits are particularly helpful for those who have young children at home, older kids needing daily transport, or elderly relatives requiring support. Weighing the pros and cons of each aspect of your compensation gives you the actual value of your total package.

What about relocation?

Changing jobs and relocating can be an exciting but also stressful process. Before you move to a new location, research the cost of living in the area. This includes expenses such as housing, food, transportation, and taxes. A higher cost of living can mean a higher salary is needed to maintain your current standard of living. If you have a family, it’s also essential to consider their needs. This includes things like schools, childcare, and healthcare. This is where spousal and family assistance comes into play. This can include help with finding employment, childcare, and schools.

Moving expenses is one of the most common parts of a relocation package, but not all are equal. Ask if moving expenses include – packing, moving, and storage. Make sure to ask for a breakdown of what is covered and whether there are any limitations. Finding permanent housing can take time, so asking about temporary housing, such as a hotel or an apartment for a specified period. If you own a home, a relocation package could aid in selling it. This can include help with finding a real estate agent, covering closing costs and providing a buyout option if your home doesn’t sell within a specific timeframe. If you’re moving to a different state, be sure to include the implications of tax laws in your new state. A relocation package can provide tax assistance to help you navigate these implications and ensure you’re taking advantage of any tax benefits you may be unaware of.

Before accepting a new position, pause and take time to consider your entire package, and don’t be hesitant to advocate for what you and your family need. If you need help with how new benefits may fit into your overall financial plan, reach out. At Treehouse Wealth, we help our clients navigate all of life’s adventures.