Planning for a job change

Steve Merrell |

Last Friday’s employment report pegged the unemployment rate for June at 3.7 percent, a slight uptick from the previous month’s reading of 3.6 percent. June marks the 16th consecutive month that the unemployment rate was at or below 4 percent. The last time the jobless rate was this low for this long, Richard Nixon was settling into his first term in the White House, Neil Armstrong was walking on the moon, and a gallon of gasoline cost 35 cents.


With the unemployment rate so low, you might think that changing jobs would be quick and easy, but that isn’t always the case. In fact, last Friday’s jobs report also showed that there are 1.4 million unemployed people who have been looking for work for more than 27 weeks. As a percentage of the U.S. labor force, that may not be a big number, but it is still a lot of people.


I recognize that not all job changes are voluntary. However, if you are thinking of making a voluntary move, there are some things you can do to help ensure your success. Job changes can be tricky and they can have a huge impact on your financial future. It pays to plan carefully.


According to the job search experts at, there is a lot of truth in the old adage that it is easier to find a job when you have a job. In the first place, employed workers generally have bigger networks for finding their next opportunity. Second, potential employers are risk averse and hiring an employed candidate gives them assurance they aren’t making a “bad hire.” Finally, employed candidates seem to be less stressed about the process which helps them come across better in interviews.


This adage is also true in another way. Finding a job can be time consuming and expensive, especially if you are living on savings. Therefore, if you are tempted to leave a job before securing a new job, think carefully about how much the transition is going to cost and make sure you have the financial reserves to carry you through the process.


A few years ago, estimated that the average job search takes 43 days. This includes time to identify new opportunities, submit your resume, wait to hear back, get an interview, get a second interview, get an offer, negotiate terms and close the deal. Let’s suppose your current job pays you $52,000 a year or $1,000 per week. If you quit your job and it takes you 6 weeks to find a new one, that job search has cost you $6,000 in missed income. In addition, you have all the normal living expenses (rent, food, transportation, healthcare, etc.) plus any costs associated with the search (travel, hotels, meals, etc.). When you add it all up, a well-orchestrated job search could easily cost you $10,000. If you are leaving a highly paid job, the opportunity cost will make the shift just that much more expensive.


The costs can be significantly higher if you are looking for a higher-level job like a vice-president or director role. According to data, those searches could take 76 days or longer.


If you are changing careers and not just jobs, the process becomes even longer, more complex and more expensive. The move may make complete sense, but you need to make sure you are prepared for it.


As with all major financial decisions, a little bit of financial planning goes a long way. Take time to discuss your career goals with your financial planner. While nothing in life is certain, your financial planner can help you get prepared for the realities of the job hunt. Your preparation will help ensure your success.




Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., an independent wealth management firm in Monterey.   He welcomes questions you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to