Many people are more likely to change jobs during their working life. When this happens, individuals must consider the financial implications that comes with changing jobs, especially long-term plans such as retirement planning.
Preenay Sathu, at FNB Wealth and Investments says “people change jobs for a number of reasons and in most cases when the move takes place, it has some implications on their finances. Some of the common reasons for changing jobs are career development, growth, better salary and benefits or due to relocation.”
“Changing jobs is more likely to have a direct impact on the individual’s finances as they may be getting a better salary compared to the previous job, spending more or less on transport, for example,” adds Sathu.
Sathu unpacks three scenarios that individuals may be faced with when changing jobs:
1. Company doesn’t offer retirement benefits. If you are leaving your current company that offers retirement benefits to a company that doesn’t offer retirement benefits; it is advisable to continue with your current retirement contributions so that you stay on track of reaching your retirement goals.
“While such decisions could be driven by better career development and/or better salary, consumers must not neglect their retirement goals. In this instance, it is advisable to consult a certified financial advisor who will guide you choose the right funds that will meet your needs,” says Sathu.
2. Company offers retirement benefits. Even if the new company offers retirement benefits, you need to ensure that you make adequate contributions which will ensure that you retire comfortably. Moreover, avoid putting all your eggs in one basket, by having your own retirement plan in addition to the one offered by your employer will benefit you in the long-term.
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3. They offer different retirement funds. For example, if you are moving from a company that offers a retirement annuity to a company that offers a provident fund, it would be worthwhile to continue with the retirement annuity in your personal capacity. This will help further strengthen your retirement benefits which will help you benefit immensely over the long term.
“Retirement saving is a long-term commitment that we should not lose sight off when changing jobs. While it might be difficult for us to immediately see the benefits of retirement savings, the long wait will be worthwhile at the end,” concludes Sathu.