Changing your job can be a far more traumatic experience than many people realise and there are several considerations to make before doing so. The COVID pandemic got a lot of people thinking about restructuring the way they did things and between redundancies and desired lifestyle changes the number of people in recent months who have changed jobs is significant.
Assuming you have made the decision (or been forced) to change your job it is important to ensure that you make the transition as painless as possible to lessen the trauma and the financial impact. Sure, some will be heading to improved circumstances, but regardless of the nature of the change, we find there is a trend for many to make a few bad financial decisions at this time. Hence these few pointers on ensuring your wealth preservation when changing your job…
Medical cannot be compromised
Compromising your medical protection is a very bad idea and it is best if you are between jobs, or particularly making a transition from a corporate employee to entrepreneur, to ensure that the medical and gap cover you had with your last employer is continued and carried on in your own name throughout any transition period.
Resist the pension fund temptation
It is found, particularly amongst younger people when changing jobs, feeling that their pension fund has not amounted to that much yet, tend to draw and spend it. This emanates from the misconception that they have plenty of time to begin a new one and they will do so at their new employer or start again as an entrepreneur, but they are forgetting the power of utilising compound interest on what has already been in place and growing.
We published an article recently on good reasons to keep the policies you have and a chat with your Financial Advisor will reveal in detail the power of continuing to grow what is already in place. Also, remember that pension drawings after the first R25,000 are subject to a substantial pay-out to SARS!
Why risk it?
If your previous employer offered risk benefits as part of a group scheme like life cover, capital disability cover, income protection, critical illness cover, funeral cover or even education cover for your young, it is prudent to keep these policies intact and have them transferred to your own name.
Although you will probably pay a little more there are a couple of good reasons for this, one being that they will not need to be medically underwritten again and the second being that you and your family remain covered during any transition period.
A time to revise and review
Whenever you undergo some sort of significant life change it is usually a good time to visit your Financial Advisor to revise and review your entail wealth profile and policies structure. This will minimise any form of backsliding and ensure that you are continuing on a growth path.
As these few points have illustrated, you need to rethink several aspects of how your entire financial position is structured, particularly if your transition is from employee to entrepreneur. If your switch is from one employer to another employer there are a number of questions to be asked of the new HR department regarding your retirement, benefits and risk policies and your Financial Advisor will guide you through this process.
Change is inevitable
Just as a Will needs to be constantly revised and updated (and this is a good time to do that too) the structure and preservation of your financial wealth portfolio have to always remain aligned to the circumstances of your life.
Hereford Group understands that change is inevitable and that’s why we are there for you, assisting with your unique financial challenges and requirements at every turn. Talk to one of our financial Advisors today to ensure your wealth preservation when changing your job – or for that matter – at any time of change!