If you’re taking a look at a different career opportunity, you’re not alone. According to Indeed, people between the ages of 18 and 24 change jobs an average of 5.7 times during their career, while those aged 25 to 34 will change 2.4 times before they retire.
This article is going to help you understand the reasons why people are changing jobs, how much more money they’re making when they do, how switching jobs affects their insurance and what to do about it, options you have to take care of the money in your retirement plan when you leave, and more.
People give many reasons why they leave one company for another. Here are five of them:
1. Their manager
It’s been said that people leave managers, not companies. The main reason many employees name their manager as the cause of leaving when they do their exit interview is the lack of appreciation expressed by their manager. Lack of trust runs a close second as feelings of loyalty between employee and employer have continued to dwindle.
2. Lack of opportunity
Feeling that they’re “stuck” in their current position runs a close second for the reasons people change jobs. Workers want to feel that they can advance their career, and they’ll go elsewhere if they don’t see new opportunities available now or in the future.
3. Workplace toxicity
According to Forbes, more than half of U.S. workers are unhappy with their job. Part of the reason they feel that way is they don’t like where they work. Personalities don’t always blend seamlessly, and in every company, you’ll find interpersonal conflicts, personality clashes, office gossip, attention-seeking colleagues, and inconsiderate co-workers. People often leave companies because they don’t like the people they work with, and it’s not always just the manager.
4. More money
Everyone has bills to pay, and many workers are tempted by the offer of a raise from a new employer. A small raise typically isn’t going to get someone who isn’t dissatisfied with their current employer to leave the company. However, a substantial pay increase definitely gets a person’s attention and is a conversation starter.
How much more money is reasonable? According to Salary.com, U.S. employers predict merit increases of 2.6% to be about the average this year, while Reuters recently reported that U.S. consumer prices have posted their largest gain in 13 years. For many people, merit increases just aren’t sufficient. Companies offering a signing bonus and compensation that is 15% to 35% higher than what a candidate is currently earning are getting workers to look at greener pastures.
5. Better benefits
All things being equal, employees want and feel they deserve, a robust benefits package. Many companies offer group health and life insurance, but many people want more. A company trying to lure someone away from their current employer and can offer them additional benefits they’re not getting where they work now — disability insurance and a retirement plan — has an advantage in getting someone to make the change.
[ Related read: The 20 best employee benefits in 2021 ]
If the benefits where you currently work are important to you, you’ll need to take that into account as you consider a job change. It would be wonderful if you could leave for more money and better benefits, but that’s not always the case.
The worse position you can put yourself in when you leave one job for another is to be without health, life, and disability insurance for any period of time. Unfortunately, it seems that Murphy’s Law of “anything that can go wrong will go wrong” is a truism for many people changing jobs.
Concerning your health insurance — you need to remain covered during the transition period from one job to another. You could do that by getting COBRA coverage from your current employer when you leave, but that is a costly option since you’ll be shouldering the full cost of your coverage.
A better option for health insurance, if you can qualify medically, is a temporary health insurance policy. A quick online search will point you in the direction of some household names in the insurance world that offer short-term health insurance at rates that might pleasantly surprise you.
If you’re pregnant and are switching jobs, it gets a bit more complicated. Your new employer’s health insurance carrier might have a waiting period for you to become eligible or may exclude certain pre-existing conditions — like pregnancy. Your best bet is to take COBRA coverage for only as long as you need to have your baby. After that, you can convert to your new employer's plan when you become eligible. As mentioned, COBRA isn’t cheap, but it will cost you a lot less than having a baby without insurance.
Disability insurance is another story. Unfortunately, you can’t bring that valuable coverage with you when you leave your job, and your new employer may not offer it as a benefit. The solution to that problem is an individual disability insurance policy. Not only won’t you need to worry about going without coverage, your personal disability insurance policy can supplement any gaps in coverage that your employer’s coverage creates. You don’t want to leave your most significant asset (your earning power) at risk.
Lastly, life insurance coverage through work usually isn’t portable, so you’ll be leaving that behind too. Much like having an individual disability insurance plan that will always be yours, life insurance protection that you purchased independently of your employer covers you no matter who you work for, and even if you’re not working. Term insurance is relatively inexpensive and is the right type of coverage for most people.
You’ll have some decisions to make when changing jobs as far as your 401(k) is concerned. Your options are:
- Leave the money in your ex-employers plan; if that’s an option you’re allowed.
- Take the money out of the plan and keep it. You’ll have to pay income tax on it, plus a 10% penalty if you’re younger than 59 ½.
- Roll the money into your new employer’s 401(k) plan, which is sometimes a possibility.
- Roll the money over into an IRA. You won’t pay personal income tax if you do the rollover within 60 days from the date payment is made directly to you. Better yet, let your IRA provider coordinate the payment of your existing plan money to be made directly to them, eliminating any chance you’ll be stuck with a tax bill and/or a penalty.
There’s much to consider when changing jobs. Coming out of the pandemic (hopefully) is creating a lot of opportunity after all of the uncertainty we’ve been through. Companies need qualified people after having had to let employees go because of the damage COVID did to their business. Remember, a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.
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