What to Do With Your 401(k) When You Change Jobs
Changing jobs is exciting, but it comes with a financial to-do list that many people overlook. One of the most important items on that list? Figuring out what to do with your old 401(k). The decision you make can have lasting implications on your retirement savings, so it pays to understand your options before you do anything.
Your Four Main Options
1. Leave It With Your Former Employer
Many plans allow you to keep your money where it is after you leave. This can make sense if your old plan has strong investment options or low fees. That said, you lose the ability to make new contributions, and managing multiple accounts across different employers can get complicated over time.
What to consider: Check the plan's fee structure and whether your former employer allows former employees to stay enrolled indefinitely.
2. Roll It Into Your New Employer's Plan
If your new employer offers a 401(k) with solid investment options, rolling your old balance into the new plan can simplify things. You keep everything in one place and maintain the tax-deferred growth.
What to consider: Not all plans accept incoming rollovers, so check with your new HR department before assuming this is an option.
3. Roll It Into an IRA
Rolling your 401(k) into an Individual Retirement Account (IRA) gives you more control over your investment choices and often more flexibility in how you manage your money. This is one of the most common routes people take.
What to consider: Make sure you do a direct rollover, meaning the funds go straight from your old plan to the IRA custodian. If the check is made out to you personally, you have 60 days to redeposit it or you may owe taxes and penalties.
4. Cash It Out
This is the option to avoid if at all possible. Cashing out your 401(k) early triggers ordinary income taxes on the full amount, plus a 10% early withdrawal penalty if you're under age 59.5. What feels like a windfall now can cost you significantly down the road.
What to consider: Even a modest 401(k) balance, if left to grow, can compound significantly over time. Cashing out resets that clock to zero.
The Bottom Line
A job change is one of the most common times people unintentionally derail their retirement progress. Taking a few intentional steps now can protect the savings you have worked hard to build. If you are unsure which path makes the most sense for your situation, reach out to schedule a conversation. We are happy to walk you through it.
Blog 2
Understanding Social Security: When Should You Start Taking It?
For most people, Social Security is one of the most significant income sources they will have in retirement. Yet the decision of when to claim it is one that gets made without nearly enough thought. The timing of your claim can mean tens of thousands of dollars in lifetime benefits, so it is worth slowing down and understanding how the math actually works.
The Basics
You can begin collecting Social Security as early as age 62 or as late as age 70. The longer you wait within that window, the higher your monthly benefit. Your "full retirement age" (FRA) is determined by your birth year. For most people reading this, it falls somewhere between 66 and 67.
Claiming Early: 62 to Full Retirement Age
Claiming before your full retirement age reduces your monthly benefit permanently. Depending on how early you claim, your benefit could be reduced by as much as 30%. The upside is that you receive payments for more years. This can make sense if you have health concerns that suggest a shorter lifespan, or if you have limited other income sources and genuinely need the money.
Claiming at Full Retirement Age
Claiming at your FRA means you receive 100% of your calculated benefit with no reduction. For many people, this is the baseline from which all other decisions are measured.
Delaying Past Full Retirement Age: Up to Age 70
For every year you delay claiming past your FRA, your benefit grows by 8%. That growth stops at age 70, which is why there is no financial incentive to wait longer than that. If you are in good health and have other income to draw from in the meantime, delaying can pay off significantly over the course of a long retirement.
Married Couples: A Coordinated Strategy
For couples, the claiming decision becomes even more nuanced. One common approach is to have the lower-earning spouse claim earlier while the higher-earning spouse waits as long as possible. This maximizes the survivor benefit, which can be important if one spouse outlives the other by many years.
The Bottom Line
There is no one-size-fits-all answer to when you should claim Social Security. The right decision depends on your health, your other retirement income, your household situation, and your broader financial plan. If you would like help thinking through the timing that makes the most sense for you, our team is here to help.
8955491.1 EXP 6/28