Starting a new job checklist: Financial considerations for your career move

By Jason R. Friday, CFP®, MPAS®, RICP®, CMFC Head of Financial Planning

As Head of Financial Planning, Jason is a strategic partner who is responsible for developing the strategy, managing the planner teams, and coordinating personal financial planning activities across Citizens Wealth Management to help clients navigate and grow in changing circumstances.

Starting a new job can be an exciting but stressful time. You're navigating new responsibilities, a new team and a new workplace culture. If you're relocating for your job, you're likely also dealing with the hassles of adjusting to a new location, commute and environment.

With everything going on, it's easy to overlook your financial plan. However, now is an important time to take steps to stay on track for your long-term goals. Start with this new job checklist to handle everything properly before, during and after you've begun your new employment.

1. Talk with a financial advisor

The most important time to meet with a financial advisor is after any significant life event, such as getting married, having a child and starting a new job. A financial advisor can review your new salary and retirement options so you understand how to get full value from everything. If you receive stock options, discuss what's needed to qualify and the best strategies to maximize your value and minimize taxes when you exercise them in the future.

Be sure to bring any documents you have for your new job like the offer letter showing your compensation and any company benefits information. As part of setting your new plan, you may want to ask yourself:

• What should my budget look like after the job change and relocation?
• How can I increase the amount I save for my monthly retirement savings goals based on my new income?
• Do I need to save more in my emergency fund for my new income?

2. Plan your 401(k) or IRA contributions

Next, set your retirement plan contributions based on your new income. A general guideline is to save 10% to 15% of your pre-tax income a year, though your savings target could differ based on the goals set with your advisor.

If your job offers a 401(k), you can set an income withholding so the money goes right from your paycheck into the retirement plan. Otherwise, you could save through an individual retirement account (IRA) outside of work or through your spouse's workplace retirement plan. Once you've maxed out your retirement accounts, you could invest more through a brokerage account or variable annuity.

If your previous job had a 401(k), you'll need to consider what to do with the account. With a transfer or rollover, you could move it into your new job's 401(k) or your IRA. Review the investments in your old plan. If they were low-cost and better than your other choices, keeping your savings in the old 401(k) might make sense. Otherwise, consider using a rollover to move everything into one account for easier tracking.

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3. Think about cost-of-living changes

With a new job, you'll need a new monthly budget. If you move, your general cost of living could change significantly. Even if you don't move, you might have a different commute, a change in spending on meals during the workday and other costs like new clothes. Starting at a new workplace may even involve a change to the remote, hybrid or in-office arrangements and hours that you're used to working. If you have children, this might mean you need to adjust your child care arrangements, which could cost you a lot more or a lot less depending on your situation.

Draw up a monthly budget that sets goals for your estimated cost-of-living changes versus your monthly income. That way, you won't accidentally overspend and drain your savings during this busy period.

4. Explore the potential tax implications

As part of your job's onboarding, you'll select the tax withholding for your paycheck. Withhold too little during the year, and you'll owe taxes with your return, plus possible underpayment penalties. If you withhold too much, you'll get the money back later as a refund, but that's time you could have been using and investing the funds.

Your new salary may also put you in a different tax bracket. New state and local taxes could also apply if you now live or work in a different area. The IRS offers a free online tool to estimate what you should withhold for federal taxes based on your situation. You would then use this advice to complete your W-4 form with your HR department. They can tell you whether your state uses this IRS form or if you'd need to fill out another state tax withholding form using the same information.

Consider consulting with a tax professional for any questions you may have.

5. Consider your health insurance options

Check what your employer offers for health insurance. Weigh each plan's monthly premium against the out-of-pocket costs, such as the annual deductible and copayments for seeing a doctor. Consider your family's health history. If your family is healthy, it's typically better to go with the lower-premium plan while putting the premium savings aside for future out-of-pocket costs. If your family needs more frequent health care, you might choose the higher-premium, lower-out-of-pocket-cost option.

If you pick a plan with a high deductible — more than $1,600 for individual coverage and $3,200 for family coverage in 2024 — you could save through a health savings account. You can deduct your contributions and invest your balance to have more for future health care costs.

6. Review other parts of your benefits package

After setting up the essentials, see what else your new job offers for benefits. Some that could be on the list include:

• Dental
• Vision
• Disability
• Life insurance
• Gym memberships and wellness products
• Mental health coverage
• Flexible spending account
• Tuition assistance

When reviewing the benefits, check whether your job covers everything or if you need to pay out of pocket. Weigh the benefit against your own financial needs. For example, you might want to know what your employer-sponsored life insurance benefit is so you can know if you need to get or make changes to your own individual policy to cover any gaps.

In general, health-related benefits like dental, vision and disability are most valuable because you might receive discounted rates versus buying these on your own. Plus, they can have a more significant impact on your finances. For example, if you become seriously injured and can't work, you'll be grateful you signed up for the available disability insurance benefits.

7. Update your estate strategy

You'll likely be asked to pick primary and secondary beneficiaries when you set up financial company benefits like a 401(k) or life insurance. Generally these are a spouse, partner, children or other loved ones who will inherit the money after you pass away. Be sure to name beneficiaries on all applicable benefits because this speeds up how quickly your loved ones receive the money. If you kept any benefits from your old job, ensure the listed beneficiaries are up to date.

Review your will and other estate planning documents, such as your family trust fund. If you bought a new house or have launched new investment accounts because of a higher salary, update your documents for these changes.

If you receive corporate stock options, consider meeting with an estate planning attorney. Together, you can figure out how your loved ones could still benefit from the stock options if you die before fully exercising. The right strategy depends on the type of option.

Getting off to a great start

A little financial planning goes a long way when you start a new job. By following this starting a new job checklist, you can feel comfortable that your budget, retirement plan, insurance and estate strategy have been properly accounted for. That way, you can continue the progress you've already made thanks to the salary and benefits of your new position.

Looking for guidance on reaching your financial goals? Request a call from a Citizens Wealth Advisor to help you prepare for the road ahead.

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