Changing jobs? How to decide if a job offer is worth it

To see how a new position stacks up against your current role, consider the answers to these four important questions.
Switching jobs can be a smart move. What can be tricky is figuring out if a particular job offer is the right one at the right time. To decide, it's essential to consider all the ways you'll be compensated. That means not only the salary and potential bonuses or company stock, but also health insurance and retirement savings plans. All can have a significant financial impact over time. Then there are the indirect benefits like work-life balance, vacation time, remote work options and potential for career growth.

Here are four questions to help you compare and determine which job is "worth" more to you:

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  1. What's the full pay package?

Once you've compared the base salaries of your current and potential new job, including the opportunity for raises and promotions as these can significantly impact your long-term earning potential and your budget, consider variable compensation, such as:
  • Profit sharing
  • Commissions
  • Bonuses
  • Stock options
  • Equity awards
To estimate the value of these variables, do research or ask your prospective employer for historical data. Then assess the impact of a new pay package on your budget, especially if your take-home pay will change. You can use this calculator to analyze your cash flow and expenses to make sure you're on track to reach your goals.
Tip: Estimating your total compensation packages at both your current position and a new one can help you negotiate a job offer, from base pay to bonuses and other extras.
Total compensation
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Total compensation
"I'm considering leaving my job for another with a 15% higher base salary. But my current job usually pays out substantial end-of-year bonuses, and it's only a few months until those would be issued."
— Michael, a 35-year-old project manager
Total compensation
What to consider
Instead of missing out on a bonus, Michael could make a point to leverage it when he negotiates his new job's compensation package. He might ask for a later start date or request a sign-on bonus or higher base pay to offset the loss of the expected end-of-year bonus.

  1. What health benefits are provided?

When comparing health benefits offered by different employers, consider these factors:
  • Costs: Your share of the premiums as well as the deductibles, copays and out-of-pocket maximums.
  • Provider network: What medical professionals and facilities are in the plan's network.
  • Extent of coverage: For services like preventative care, hospitalizations and prescriptions.
  • Supplemental benefits: Common ones include dental, vision, life and disability coverage, and wellness perks such as gym memberships.
  • Health savings accounts: See if the employer offers a health savings account (HSA) or flexible spending account (FSA), both of which can help offset medical expenses.
Finally, it's important to assess how the plans fit your personal and family health needs, taking into account expected life events, such as the birth of a child, or any special accommodations you might need due to a pre-existing condition.
Tip: Don't forget to plan for a gap in insurance coverage between jobs. Learn about continuing your existing health insurance coverage through COBRA or other options until your new benefits take effect.
Health benefits
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Health benefits
"I enjoy being self-employed, but I have a job offer that pays a salary comparable to what I make now and would also offer comprehensive health insurance."
— Sarah, a 27-year-old graphic designer
Health benefits
What to consider
Because Sarah has been paying for health insurance through her state's insurance marketplace, the savings on premiums and potential improvements in coverage are a major draw to the new job. Even though the take-home pay will be similar, this benefit could outweigh other factors like the potential loss of freelancing flexibility.

  1. How do the retirement savings plans compare?

A workplace retirement plan, if offered, is one of the most effective ways to save for the future. When comparing plans, consider these features:
  • Employer match: The amount your employer contributes to your account can significantly boost your savings. Compare the percentage of contributions that are matched and any caps.
  • Vesting schedule: The time it takes for you to fully own your employer's contributions can matter. Leaving before you are vested may mean losing some or all of those contributions.
  • Investment options: Having a diverse mix of low-cost choices can help you optimize your long-term returns. Ask your potential new employer about their plan's investment options.
  • Roth 401(k): Many employers let you choose between making pre-tax contributions to a traditional 401(k) plan or after-tax contributions to a Roth plan, giving you more tax flexibility.
Tip: If you take the new job, don't forget about your current 401(k). It's important to consider all of your options before deciding what to do with it.
Retirement planning
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Retirement planning
"A startup has offered me an exciting role. But in 10 years at my current company, I've accrued significant assets in my 401(k) plan, and a large portion of the company-match funds have not yet vested. I don't want to leave money behind."
— Chris, a 45-year-old professional
Retirement planning
What to consider
As he weighs the job offer, Chris should think about how the move would affect his retirement planning. If he leaves, he should consider the potential loss of his soon-to-vest company matches, the growth potential of those funds and whether the new role's other benefits and opportunities for job growth or equity could help compensate for the loss.

  1. What is the company culture?

In addition to salary and benefits, it's crucial to evaluate factors that can indirectly impact your overall financial well-being. Those may include:
  • Remote work: Company policies, such as remote work and flexible hours, can have financial implications. For example, remote work may save you money on commuting costs or an office wardrobe.
  • Work-life balance: Consider each job's impact on your quality of life, taking into account the role's demands, company culture, working hours and overtime expectations.
  • Paid time off: What are the policies for vacation and sick days and other absences, such as maternity and paternity leave?
To be sure, a new job can present an exciting opportunity to grow professionally and perhaps earn more. Yet before you decide whether to stay or go, there are many things to consider, from the total compensation to what impact a new position may have on your life and budget. Weighing all the factors can help you negotiate — and ultimately make the call on whether to accept the offer.

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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
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