Plan Ahead Before Joining The “ Great Resignation ”

It ’ s been called the “ Great Resignation ”– the large number of Americans voluntarily leaving their jobs . If you plan to be part of it ( ideally with another source of employment lined up ), you ’ ll need to make the financial moves necessary to keep making progress toward your long-term goals . Here ’ s some background : After a year in which the pandemic caused so many people to lose their jobs , the economy is opening back up , but the “ quit rate ” – the number of jobs people have voluntarily left – has been breaking records . Some economists say this high quit rate is because people are confident of getting better jobs , with higher pay and more flexibility to work at home , or because they are preparing to start their own business or join the gig economy .

If you ’ re thinking of joining this temporary migration from the workforce , how can you help ensure that you ’ ll be financially stable and can continue to make progress toward your long-term goals ?

Your first move is to look clearly at your financial situation . As mentioned above , it ’ s best to have new employment in hand before you quit your job . Alternatively , perhaps you have a spouse or life partner who earns enough to sustain the two of you , or you ’ ve built up an emergency fund that gives you a cushion .

However , if your short-term income is less than you previously earned or you need to go without a paycheck for a while , could you still pay your bills ? If you are strapped for cash , you might be tempted to tap into your 401 ( k ) or other employer-sponsored retirement plan . But this move will generally result in taxes and , if you are younger than 59½ , a 10 percent penalty as well . Because of this , and because your retirement accounts are designed to be

a financial resource after you retire , think twice before dipping into these funds if you leave your current employer .

If your employer allows it , you can leave your money in the 401 ( k ) so you ’ ll still be accumulating resources for retirement . You also have the option to roll those funds into an individual retirement account ( IRA ) or a new employer ’ s retirement plan .

And if you plan to work for yourself as a freelancer , consultant or business owner , you ’ ll still want to save toward retirement . Possible retirement plans for the self-employed include an “ owner-only ” 401 ( k ), a SEP-IRA or a SIMPLE IRA , all of which may be relatively easy to establish and offer tax benefits . A financial advisor can help you find a retirement plan that ’ s appropriate for your needs .

Here ’ s something else to keep in mind – an emergency fund . As mentioned above , if you already have one , you ’ ll have some breathing room if you ’ re thinking of leaving your job and might have a temporary gap in income . But as the name suggests , an emergency fund is there to help cover unexpected costs , such as a major home repair , without forcing you to take out a loan , or cash out part of your longer-term investments . So , if you are planning to tap your emergency fund , work to restock it as soon as possible .

If you ’ re participating in the “ Great Resignation ,” it means you ’ re feeling positive about your future employment prospects , which is great . But you ’ ll want to support that optimism with a strong financial foundation .

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor .

Edward Jones , Member SIPC

Matt Dudkowski has been a financial advisor with Edward Jones since 2002 , serving individual investors in the Pittsburgh area from his Shaler Township office . In January of 2015 , Dudkowski accepted an invitation to become a limited partner with the firm .

Since joining Edward Jones , Dudkowski has obtained the professional designation of AAMS ®. Prior to Edward Jones , Dudkowski , as a CPA , worked at the H . J . Heinz Company , and at Ernst & Young LLP . He currently serves on the board of directors for Keystone Wellness Programs , a local nonprofit organization .

A native of Butler County and a graduate of the University of Notre Dame , Dudkowski resides in Gibsonia with his wife , two sons and daughter .

SHALER ❘ SPRING 2022 19

IN Shaler Spring 2022 | Page 21

FINANCIAL FOCUS

Plan Ahead Before Joining The “ Great Resignation ”