You know you’re a finance nerd when the first thing you wonder about when you’re considering leaving your job is what about contributing the full amount to your 401(k) for the year?!
As some of you may have noticed, my job satisfaction hasn’t been the greatest over the last while. Well, I’ve finally decided that it’s time to look for a new job externally. I’m working on preparing my shortlist of companies to whom I will send my resume (my goal is three) and then I will work on studying for interviews.
I’m not really remotely concerned about finances. In fact, I’m trying to convince my boyfriend that he should scrounge up the vacation days to go traveling for two weeks while I’m between jobs. Maybe that Europe trip we were planning for next fall could happen this fall/summer!
As of today, I have contributed ~$8,000 to my 401(k). I decided to leave June’s contribution as is because I’m reasonably confident that I will have a full July paycheck. I can then max out my 401(k) with my July paycheck, leaving me with a paycheck of about $650.
The other question is what I will do with my 401(k) plan after leaving. My current plan charges a fee if you leave your money in the plan, so I will have to evaluate between a) leaving the money there and paying the fee, b) moving the money to a Rollover IRA at Vanguard and having to undo my Roth IRA conversion for 2014 and not be able to do the Backdoor Roth IRA in any future years, and c) moving the money to my new employer’s plan. My hope is that option c) would work out, but option a) might be better than option b).
B) Cash flow
The $650 July paycheck would be concerning if I didn’t have enough vacation days banked to probably get a gross payout of those at around $3,000. Those two amounts together should be enough to cover August spending as normal. I hope to take at least a couple weeks off between jobs, which means that I will probably draw down from savings a bit, but that’s okay because I have about 6 months of expenses squirreled away in a savings account ($20,000) and especially with no 401(k) contributions at the new job for the rest of 2014, I should be able to replace any savings fairly easily. I’m not really concerned about money with this change, but I want to plan out how things are going to happen. I’m also going to stop making extra payments on the mortgage for a few months as the job situation shifts, stockpiling a bit of cash instead.
C) Health insurance
If I leave after the 1st of the month, my health insurance coverage will cover me through the rest of that month (I’m going to double check on this). If my boyfriend and I lived together, he could add me to his policy during the break, but since we don’t yet officially, I would probably pay for COBRA for any otherwise uncovered time necessary. I also have about $1,400 left in my Health Savings Account from the last plan year, which I will probably transfer elsewhere after I leave. Perhaps just to my credit union, where I could get 1% on it since my balance is so low.
My insurance has been so cheap with my current company that I don’t know what to expect with another one! It is the tech industry though, so I could end up paying even less. We’ll see how that falls out!
D) Social Security tax
If I stay with my current company, I will finish paying it in October. I’ll have to adjust my withholdings on my W-4 with the new company so that I don’t end up with a huge refund in April.
E) Future compensation
I don’t expect to replicate last year’s $200,000 gross income anywhere. I do, however, expect that any reasonably sized company would match my current total compensation range of $150,000 to $170,000. With a smaller company, I’m aiming for anything at or around $120,000 with a sane expectation of work hours (40-45 per week), 3 weeks of vacation the first year, and more holidays than I currently get. Obviously this will reduce my savings rate a bit, but that’s totally okay. I should still be able to make the full 401(k) and Roth IRA contributions, cover my normal expenses and have about $30,000/year leftover after tax to save outside of retirement accounts for a total overall savings rate of around 70%, which is not too shabby.
I also plan to ask questions around: base salary, bonuses (cash/stock? vesting schedule?), employee stock purchase plan (do they have one? what does it look like?), 401(k) (matching, plan details, vesting schedule, if they allow after-tax contributions, vesting schedule), health/dental/vision insurance info, fringe benefits, and days off.
All in all, I am really excited about looking for a new job. It has been years since I interviewed and I’m now interviewing as an industry hire rather than a new grad hire. I’ve located several companies that I’m really excited about the prospect of working for and I’m updating my resume.
Readers, what do you consider in terms of financial concerns when you’re contemplating a new job? Have I missed anything?