When you receive a promotion or a raise at work, this change can come with a number of changes that might impact your financial situation. 

In this checklist we focus on reviewing the potential financial impact of a raise or a promotion, including:

Cash Flow and Income

  • Will your cash flow change due to the raise or any additional compensation that comes with the promotion?
  • Will this change impact your ability to save for retirement and other goals? If so, work to increase savings in areas like your retirement plan, HSA and others. 

Employee benefits

  • In the case of a promotion, does the new job come with added benefits you need to consider?
  • These additional benefits might include stock-based compensation or deferred compensation.

Retirement Plans and Deferred Compensation  

  • In the case of a promotion will you now have added benefits, such as stock-based compensation, deferred compensation, and/or an equity position in your company? If so, there are a number of planning issues to consider. 
  • Will your higher income affect your ability to make contributions to a Roth IRA or deduct contributions to a traditional IRA?
  • Be sure you are fully funding your employer-sponsored retirement plan.
  • If you will receive non-qualified stock options or restricted stock options as part of your promotion, there are a number of planning items to work through.

Tax and Insurance Planning

  • Your higher compensation may present some additional tax planning issues. At the very least, you will want to ensure that your withholding is adjusted to ensure you don’t have a hefty tax payment due.
  • Your new income might merit increases in life insurance coverage and /or disability insurance coverage. 

This is a comprehensive checklist of the types of issues you should talk with your advisor about when you receive a raise or a promotion at work. This change can have a great financial impact, and your planning can help make the most of this career advancement. 

Click Here: What Issues Should I Consider if I Get a Promotion or Raise at Work?