Got Great Resignation FOMO? Here's what to do

October 27, 2021 • Issue #117

Hi y’all —

When I was in elementary school, I briefly played both soccer and baseball. On my soccer team, the Pink Dolphins, I was the goalie — it involved the least amount of running, and I got to wear cool gloves. I don’t remember much about my baseball stint, other than that we used a pitching machine that gave me incredible anxiety and once at the plate I swung the bat so hard I spun in a circle and hit myself in the mouth.

I ended up quitting both sports because of an obvious lack of talent and general disdain for physical activity. But in general I’m not a quitter; I’m stubborn to a fault.

Imagine my disdain, then, that quitting is cool all of a sudden. The job crunch, the labor shortage, The Great Resignation — like Taylor Swift, you can call it what you want. But you can't ignore the trend: People are quitting their jobs en masse.

Recent numbers from the Bureau of Labor Statistics indicate that 4.3 million Americans resigned in August, likely inspired by their padded savings accounts and lingering health worries amid the pandemic. There are 10.4 million job openings, meaning workers finally have the upper hand in the job market.

"People are reprioritizing what's important to them and the social contract they have with their employer," says Sri Reddy, senior vice president in retirement and income solutions at Principal.

Landing a new gig may sound nice, especially if it pays more. But Reddy said not to forget that what you do now could impact your finances in the long run. Before you slam that strongly worded resignation letter down on your jerk of a boss' desk, it's crucial to consider the potential consequences for your retirement — even if that's still decades away.

Here’s how he, and other experts, say you can get in on the Great Resignation WITHOUT accidentally screwing up your retirement.

1. Prepare to make the leap

Katherine Tierney, senior retirement strategist at Edward Jones, said you should know where you're going next before you quit your current gig. If you're changing companies, line up a new role. If you're starting your own business, have the funding, location and paperwork nailed down.

Then, "review your finances to make sure you can financially support your next move," Tierney says. That includes continuing to save toward long-term goals like retirement during the transition. Any interruption in your retirement savings now could result in big losses later.

Ideally, you want to have an emergency fund stashed away with three to six months' worth of essential expenses. (FYI: If The Great Resignation has you going freelance, you may want a year's worth.) That way, if something disastrous happens, you won't have to tap into money you've earmarked for retirement.

2. Read the fine print

You probably enjoy several benefits in your current position — but they may come with a catch.

If you've been contributing to your 401(k), for example, that money is yours. But if your employer has been matching those funds, it's likely you don't 100% own them until a certain amount of time has passed. Companies often adhere to what's called a 401(k) vesting schedule as a way to entice employees to stick around longer. Look up those dates before you jump ship.

"You want to be really careful because if you're within a few months here or there, you may be leaving thousands of dollars on the table you simply forgot about," Reddy adds.

Leaving a job sooner than expected can also affect other perks, like tuition reimbursement or student loan assistance. Check your work documents for payback clauses and talk to human resources about whether your departure means you'll be on the hook for money the company previously gave you.

3. Look beyond salary

Ross Cohen, a wealth advisor and certified financial planner with Bartlett Wealth Management, warned people not to get too starry-eyed over the salary associated with a new role. Consider basic factors like its location and remote work policy. Then scrutinize the entire compensation package, including its 401(k) offerings, profit-sharing plans and stock options.

Here, too, consider the time horizon. If you're only using the role as a stopover job, you might not be around long enough to actually reap the rewards.

Reddy said to pay close attention to health care benefits. Switching insurance providers might end up costing you, especially if you or a family member has a condition that requires access to certain doctors or a specific kind of treatment. In those cases, "your base salary may not showcase what your costs are going to be," he adds.

4. Take care of your 401(k)

As you're wrapping up at a job, check on your 401(k). Take special care if you've borrowed against it.

Every 401(k) plan has its own policies, but "if you leave [your job], a lot of those loans become due immediately," Reddy says. If you don't pay the money back, then the IRS considers the resulting offset a disbursement, which comes with a 1099-R, taxes and possibly a penalty, depending on your age.

Another consideration is your 401(k) balance. If it's under $1,000, employers typically just mail you a check — which will trigger the tax consequence and penalty unless you roll it over into a new 401(k), if the plan sponsor allows, or individual retirement account (IRA) within 60 days.

Consolidating your retirement funds into one account can be helpful so "you don't have these smaller accounts kind of lingering out there," Cohen says. It also may allow you to devise a more comprehensive approach and investing strategy.

THE BOTTOM LINE

(but please don't tell me you scrolled past all of my hard work)

Take the Great Resignation as a chance to make sure you're in a position that aligns with your passions. If nothing else, the more you like a job, the longer you'll stay there — and the fewer retirement planning changes you have to navigate.

Tierney recommended running the numbers to make sure you're putting away enough to afford your (eventual) desired retirement lifestyle. If, in your new role, you have more income coming in, you may want to adjust your approach. Contribute more to your 401(k), sure, but also do some self-reflection: What gives you the most fulfillment? Is it family? Travel?

Switching jobs may provide "an opportunity to retire earlier or do things in retirement you weren't even considering before," Tierney adds.

VIA GIPHY

RECEIPT OF THE WEEK

check out this wild celebrity purchase

VIA INSTAGRAM

Kate, the Duchess of Cambridge, wore a $5,488 dress, $995 skirt and a $675 pair of shoes to events last week. But, in perhaps the most badass princess move since Mia Thermopolis thrust her ice cream into Mandy Moore’s chest, Kate also donned a pair of $15 Asos earrings. We stan a frugal queen.

INTERNET GOLD

five things I'm loving online right now

1	Raccoon eating cereal.
2	Here are five weird phone numbers to call, including one where a recorded voice says, “If anyone gets this, just just disregard it, k? And hang up.” Jenny from 867-5309 is shaking.
3	How cool is this award-winning photo of the foggiest place on earth, the municipality of Airuno, Italy? I’m also amazed by the runner-up, a picture of lightning from a storm in Cannes, France, taken by a 32-year-old who drove 300 miles and slept in his car in order to get the shot.
4	Allow me to toot my own horn for a sec — I wrote Money’s November cover story, a feel-good feature that explores the intersection of romance and cryptocurrency. Crypto is cropping up in DMs, dates and divorces because the community is so tight-knit. “When you're a Bitcoiner or cryptocurrency enthusiast, it's almost like a worldview,” one source told me. “It becomes a little difficult to relate to ‘normies,’ so to speak.” But beware of cryptomancing…
5	This makes me want to buy a bunch of Play-Doh and take the day off to make clay art.

401(K)ITTY CONTRIBUTION

send me cute pictures of your pets, please

VIA KRISTIN KELLY

Meet Maggie, a cat who is retiring to pursue her true passion: drinking beer.

See you next week.
 

 
P.S. Do you have any tips for resigning without shooting yourself in the foot retirement-wise? What’s your favorite scene from The Princess Diaries? Have you ever gotten a dumb injury while playing sports? Send replies to julia.glum@money.com or tweet @SuperJulia on Twitter.

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