Leaping into a new job or career is exciting but overwhelming – and getting it to work with your financial goals is vital to long-term success. This month we’ll discuss tasks that will aid your financial outlook through a job change.
Set Yourself Up for Success
Matching benefits equals more money for your future and the sooner it’s invested the longer it can grow. Therefore, get the details of your new work plan expeditiously. If you’re given investment options, talk to your wealth advisor about what complements your existing retirement plan and portfolio.
Don’t Leave Anything Behind
Handling a previous group RRSP or pension can easily get put off with the premise of getting to it when things calm down. You should receive an options package or statement detailing the options for your plan going-forward, shortly after you leave your old employment. The most common options are to leave it where it is, consolidate it elsewhere or cash it out.
Best practice is to take this package to your wealth advisor. Together you can determine a course of action based on your situation. Once you’ve determined your choice, your advisor can compile the necessary information and paperwork for you to proceed.
Training & Equipment Costs
Training and equipment costs often come with a new job – employers may cover some or all these costs. If not, you may be able to claim for employment expenses on your income taxes. You’ll want to check with your accountant or CRA for the current list of eligible claims. Then simply collect your receipts and get the appropriate form from HR/payroll to file.
Back-to-School Costs
What if you’re going back to school instead of going directly to a new job? You’ll need to come up with cash.
First, investigate savings opportunities. Look into scholarships and bursaries:
- Ontario.ca Student Financial Resources
- Scholarships Canada
Savings Tip – Many admission-based businesses offer student discounts. There are also student discount programs – some charge a fee – which may help your cashflow.
After looking at savings, look at sources of money with your wealth advisor. One possibility is the Lifelong Learning Plan (LLP) which allows qualifying individuals the ability to withdraw from their RRSPs without the immediate worry of taxes. Under this program you can withdrawal up to $10,000 from RRSPs a year, up to a maximum of $20,000 total for your or your spouse's education.
In exchange, you must recontribute the LLP money into your RRSP within 10 years of completing your program or you’ll have to claim the unpaid amount as income. This is done by designating RRSP deposits as repayments on your income taxes. However, not all RRSP contributions can be designated as LLP repayments so speak with your accountant or wealth advisor when devising your repayment plan.
An employment change can be a substantial but if you follow these tips, you should have a smoother transition and better long-term financial success. For more on career changes, contact KLT Wealth Management.
- Courtney Beach, QAFP
