Record number of workers who quit in the US 1:00
(CNN) -
Millions of Americans are deciding to quit their jobs these days, and they don't always have another in line.
Whether it's due to burnout, a desire for more flexibility or better pay, or the pursuit of a completely different career, saying "I quit" can have long-term financial implications.
"Before you go, there are things you want to do to prepare. And then after you leave, you want to see the implications in the short, medium and long term," said Isabel Barrow, director of financial planning at Edelman Financial Engines.
More women are suffering from burnout syndrome, and that is a problem
Here's what you need to know if you're considering quitting without another job offer:
Take a quick check of your instincts
It's a good time to look for work, but make sure you are leaving for the right reasons.
"Very often, the grass is not necessarily greener," said Tami Simon, corporate consulting leader for employee benefits firm Segal.
"Take the time to really think about what your own motivations are and the real reason you are thinking about quitting your job instead of just following a trend."
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If you are looking to leave because you are looking for more flexibility, money, responsibility, or want to learn new skills, now is the time to ask your current employer.
"We have seen organizations learn to be agile and flexible in a variety of different ways, certainly with their workforce," Simon said.
"If you want to pursue a new direction in your career and are thinking of going back to school, your employer may be interested in helping you achieve it and maybe even helping you finance it."
Contacting a mentor or sponsor to discuss a possible change can also help provide information and clarity about the decision.
"Talk to your trusted advisors, the people you can really count on to always support you and always give you the honesty that you may not be able to determine for yourself," Simon said.
6 signs it's time to quit your job
Timing is everything
Do you remember all the paperwork you received when you started working?
It is likely to include information on the potential economic impacts of resigning.
Simon suggests reviewing your original offer letter, compensation arrangements, and employee handbook before announcing your departure.
"What are you contractually bound to?"
Sometimes benefits are awarded based on how long you've been with the employer, and offers can also include non-compete clauses or refunds of signing bonuses or other incentives if you quit before a certain period of time.
For example, you may be anticipating a large payment for unused accrued paid time off, but according to Simon, laws vary as to whether it must be paid.
"You shouldn't assume that if you give two weeks' notice and you have two weeks of vacation, you can spend it sitting on the beach. Make sure you see how the organization is structured."
Leaving could also potentially mean losing your bonuses.
"We're about to get to the end of the year, there may be year-end bonuses or incentives that come with that," said Kristen Carlisle, general manager of the Betterment 401 (k) business.
"While it's tempting to make a change as quickly as possible ... think of that as part of your total compensation and something that can help you as you transition out of leaving your job."
Many people are quitting their jobs.
How to do it correctly?
Evaluate your budget
Job seekers have the upper hand right now, but it's hard to know how long it will last.
"You have to look at the worst case scenario," Barrow said.
"Six to nine months after you've taken time off, you don't know what that job market will be like."
Before leaving a salary, create a budget that details your monthly income and cash expenses.
List all of your nondiscretionary living expenses, including housing, transportation, food, taxes, utility bills, and any debt that still needs to be covered without pay.
Carlisle recommended having at least three to six months of living expenses saved in addition to your regular checking, savings and retirement accounts.
Barrow recommended having 12 to 24 months of living expenses on hand.
"You really need to have a really strong cash reserve before you jump in," Barrow said.
"While you're out of work ... your refrigerator may need to be replaced, or [you may] need a car repair or a major dental expense."
And if you plan to take this time for expensive endeavors like traveling in Europe, Barrow recommended saving for it outside of your emergency fund.
He also suggested evaluating debts, especially credit card debts.
"You should try to address that and get rid of them before you leave work. What you don't want to do is find that you have to choose between: 'Do I pay my mortgage or do I pay my credit card? You want to get rid of some of those unsecured debts that they could have higher interest rates. "
A record number of Americans quit their jobs in September
Benefits: What are you giving up?
Leaving a job can also mean giving up other benefits, including health insurance.
"Most employees know that their employers offer health insurance benefits, but they don't always realize how much employers subsidize the cost," Simon said.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) generally requires employers with more than 20 workers to offer a temporary extension of health coverage to former employees for a specified period of time.
"Employers sometimes subsidize the cost of COBRA, but most do not," Simon said.
"And employers can charge up to 102% of the applicable COBRA premium."
He added that employers must provide a COBRA notice detailing their rights and responsibilities, including costs of coverage.
Another option is to seek coverage on public health exchanges.
You can review the options your state offers at healthcare.gov.
"[Health care] is a lot more expensive than people expect," Barrow said.
"It is very important that you consider it as part of your general budget before leaving your job."
What about retirement savings?
If you have a 401 (k) plan at your future employer, you will have to make a decision about what to do with it.
You have a few possible options: you can leave it on your current employer's plan if it's allowed, but you won't be able to make further contributions.
Or you can incorporate it into a new employer's plan once you find a job.
You can also roll over a 401 (k) to an individual retirement account (IRA).
"Consider contributing to an IRA while you're between jobs," Carlisle said.
"As much as you can save for retirement, it will set you up for long-term success."
He added that you should make sure to transfer the money to a qualifying account so that no fees are imposed on you.
Try to avoid diving into your 401 (k) early.
"A lot of people see that 401 (k) as a potential reserve fund ... that's not a good option for most people outside of retirees. There are penalties involved and that pushes retirement even further back," he said Barrow.
You should also check to see if there are any award dates attached to your retirement plans.
"Do you have a pension that you're leaving on the table or are you not fully vested in your 401 (k)?" Barrow said.
"Those are things you should also consider before pulling the trigger and leaving."
Resignation
