Client Question: Career Transition

May 2, 2024

This past week, I spoke with several clients in the middle of a career transitions for a variety of reasons (transitioning to a new role, opting to take some time away, and entering well-deserved retirement stage). With each of these clients, the items to consider during a career transition vary but there are some common themes that I wanted to highlight

Employer Retirement Plan Contributions

Employer retirement plans (ie: 401k or 403b plans) are tied to your employment and wages. As a result, when you leave a job (even if you are due to get severance), your ability to fund that account will also end (as will any employer match). If you are going to transition jobs mid-year (or leave the workforce), it’s worth checking in on your contributions year-to-date and if you have the ability to increase it for your remaining working months, doing so will give your retirement plans a helpful boost! It’s also important to consider the impact to this retirement funding stopping on your overall financial situation and supplementing those savings elsewhere (either now or in the future) to still reach your longer-term goals

Employer Retirement Plan Next Steps

When you leave a job, you have a decision to make regarding your Employer retirement plan – either leave it where it is, role it into a new employer plan (if you take another job), or roll it to an individual retirement account (IRA). This is a very complex decision that is subject to considerable rules and regulations. I’ve written about it in the past here. If you are leaving a job, be sure to complete a careful and complete analysis of all your options with your advisory team

Consider Vesting

Some employers have vesting rules for employer matching contributions or incentive pay. While sometimes there is no way for you to control the timing, it’s worth reviewing any funds owed to you and their vesting schedules. If you can increase your wealth by waiting a few weeks or months, it may be worth it

Severance Savings

One of my clients is in transition due to volunteering to be a part of a Reduction in Force and as a result, will receive severance while she considers her next career step. She wisely asked about what to do with those earnings (as they will be higher than normal as 401k and other paycheck deferrals will cease). We talked about building up cash reserves (in the event she can’t replace income at the end of her severance term) as well as saving cash to help offset “make up” 401k contributions if she takes a new job and wants to reach the 2024 max under that employer’s plan


Health insurance is a major consideration for people during a career transition. Clients I worked with all have insurance via their spouse which makes this far easier. However, if you aren’t in that situation, you can continue your current coverage under COBRA until you can line up new coverage (private pay, new employer, Medicare, etc). Further, you should keep other insurance items in mind – like Health Savings Accounts, employer-paid life insurance, and dental insurance, making sure those items are properly addressed as well


If you are leaving a career for retirement, hopefully it has been a decision in the making for many years. It is often far easier to leave the workplace than it is to re-enter it after a break in my opinion, so the decision to leave a career is one to be carefully evaluated and diligently planned. With my clients, we often start those discussions several years in advance, with very careful and frequent tactical updates in the 12-18 months preceding the target date. Upon retirement, we are executing against a pre-set plan as it relates to any pension plans, social security, Medicare, pre-set spending levels, and other levers that help set a course for the retirement years

Income Taxes

An often overlooked item when transitioning your career is income taxes. For most workers, taxes are paid via payroll withholdings. If you move to a new job – or leave the workforce – your income will change and so will your withholdings. It’s a great idea to walk thru the new numbers with your tax advisor and ensure that you are paying in the proper amount of taxes for your new set of circumstances

As you can see just from this brief list, there are many items to consider when you transition from your career for any reason. As always, it is best to surround yourself with a team of trusted advisors that can help guide this part of your journey.

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