Are you one of millions of Americans who quit their jobs this year? If not, are you one of many who are thinking about quitting and are praying for change? If you answered ‘yes’ to either of these questions, then it means that you’re part of the Great Resignation. This is an ongoing socioeconomic phenomenon that’s making history. If you recently quit or are thinking about quitting your job, you should also be thinking about how this could affect your estate plan.
What is the Great Resignation?
The Great Resignation is a term describing an ongoing phenomenon in which larger-than-usual numbers of Americans are quitting their jobs. Anthony Klotz, a Texas A&M professor, is credited with coining the term.
According to an article published by Inc.com, 11.5 million U.S. workers quit their jobs between April and June 2021. The U.S. Bureau of Labor Statistics reported that there were 4 million resignations in July 2021 alone. Other reports and studies indicate that the Great Resignation is far from over. Gallup found that 48 percent of workers are thinking about quitting their current jobs.
Economists and sociologists believe that the Great Resignation began in the spring of 2021. This coincides with a time period in which vaccinations helped to ease the severity of the COVID-19 pandemic. Unemployment rates also dropped and job availability increased during this time.
Why are People Leaving Their Jobs?
COVID-19 was an unexpected event that threw a curveball at the entire human race. Mandatory lockdowns and the necessity of working from home created a significant lifestyle shift for all Americans.
It was during this time that the Great Resignation began to manifest. According to Inc.com, 74 percent of workers who resigned did so because the shut-downs gave them the time to think and reevaluate their current work circumstances. Over half identified with the root cause that they were experiencing burnout with their current places of employment. Others cited reasons such as job dissatisfaction and fear caused by employer actions. At least one-third of resigners felt concerned about their personal safety when asked to return on-site despite the pandemic not being over.
For these reasons and more, a historic number of Americans quit their jobs. Another wave of resignations may still come.
Life After the Great Resignation: What does it Entail?
Life after the Great Resignation looks different from household to household. Some families reevaluated the advantages and disadvantages of bringing in two incomes. Many realized that the benefits no longer outweighed the drawbacks. As a result, they pared down so that they could spend more time at home with loved ones.
Others went on to get hired in new jobs that better fit their personal values, lifestyles, and interests. Those currently job hunting are seeking out employers that offer meaningful work and flexible policies that encourage better work-life balance, including the option to work from home.
It’s also important to point out that many people are shifting away from the idea that you have to live near your job. The Great Resignation has brought about a change in which many people are prioritizing where they live first, and their jobs second. Employers are faced with the decision of whether they will provide remote working options.
Last but not least, some took the courageous leap to start their dream business. Some of these entrepreneurs strive to create their own reality so that they would be subject to workplace constrictions no more. Others may have realized that life can be unfairly short and gathered the courage to take the risk of their lifetime.
The Great Resignation: 4 Ways to Protect Your Estate Plan
Regardless of what the Great Resignation might look like from one individual to the next, they all seem to share a common thread. The COVID-19 pandemic created an opportunity for Americans to evaluate their current realities. Many are realizing that they crave change, which in turn can lead to drastic action.
Financial experts and advisors, however, are warning against quitting your job without proper preparation. Although some Americans are supported by unemployment assistance, others are supporting themselves by dipping into retirement and life savings. These actions can throw your financial and estate plans into a tailspin.
People often mistake estate planning for a process that is solely about preparing for your eventual death. Although this is one aspect of estate planning, it is so much more than that. The process of estate planning allows you to protect yourself and your loved ones by securing your financial future.
The COVID-19 Pandemic and the resulting Great Resignation has brought about significant shifts for Americans. That’s why this is a more critical time than ever to reevaluate your estate plan to make sure you and your loved ones are protected.
Here are 4 key aspects of estate planning that you should be paying attention to:
1. Implementing Strategies for Financial Security
If this pandemic taught us anything, it’s to expect the unexpected. Long-term illness, sudden job loss, the decision to retire earlier than expected, the desire to change our career, the resolve to start our dream business — these are all unplanned circumstances that can create short-term or long-term financial strain. Many Americans are likely dipping into their retirement and life savings to support themselves during these major life shifts.
However, these can have negative consequences in the long term. For instance, tapping into your retirement savings will subject you to taxes and penalties. Relying on your emergency savings can leave you financially exposed.
Revising your estate plan creates an opportunity to take a look at how you can better secure yourself financially. If anything were to happen, how can you support yourself and your loved ones without putting yourself at risk? This might take the shape of creating an investment portfolio or creating an emergency savings account specifically for circumstances such as these. Regardless of your decision, make sure to update your estate plan to incorporate any new assets you might acquire.
2. Don’t Abandon your 401(k)
A lot of Americans make the mistake of abandoning their 401(k) plans when leaving their employers. According to MarketWatch, we’ve collectively forgotten over 24 million accounts holding $1.35 trillion in assets. 401(k) plans are popular because they’re sponsored by employers, but they’re often forgotten in the hustle and bustle of changing jobs. If you have a 401(k) or alternative employer-sponsored plan, be sure to create a plan for it. You can see if your employer will continue to hold onto it for you, or you can choose to roll it over into an individual retirement account (IRA). Whatever you do, don’t forget about it and abandon it. We also don’t recommend cashing out your retirement plan because you’ll face heavy taxes.
If you are near retirement age, you might be eligible to make catch-up payments toward your 401(k). Catch-up tax provisions allow those over a certain age to pay extra into their retirement plans without any tax penalties. If you’re thinking about retiring early, or didn’t start saving up for retirement until later in life, this could provide you with the golden opportunity to increase your savings while you’re still employed.
Last but not least, don’t forget to update your Trust or Will with your new retirement savings plan information. If you choose to roll your savings over into an IRA, be careful to fill out your new beneficiary designation, and update that information in your estate plan as well.
3. Shop for Insurance Policies
Quitting your job also means that you could lose employer-sponsored insurance benefits, such as medical, life, and disability insurance. Double-check with your HR department how long your policies will last if you were to resign. In most cases, policies will extend through the last day of the month that you last worked. This will give you a little bit of time to shop around and purchase your own insurance policies. Make sure to update your policy and beneficiary designation information in your estate plan.
4. Don’t Forget Business Succession Planning
If you’re one of the few who decided to take a leap of courage and start your dream business, we applaud you. We also recognize that this can be a tough transition phase where you may have bouts of feeling insecure or deal with imposter syndrome.
When it comes to lofty goals, it helps to break them into smaller, actionable steps. Doing so will help you feel more accomplished and less overwhelmed. Alongside dreaming up big business ideas comes the practical administrative tasks, such as setting up your company and filing your taxes. Another essential part is figuring out how to incorporate your business in your estate plan.
Some entrepreneurs decide to transfer their business interests into a Trust. That way, you can have peace of mind knowing that your business assets will pass easily to your Trustee of choosing should you pass away or become incapacitated in any way.
You should also be creating a business succession plan to keep along with your estate planning documents. Such a plan should address a smooth and systemic transfer of management and operations to prevent loss of income.
Always Consider Your Estate Plan When Making Life Changes
The Great Resignation is ongoing, and we have yet to see what the long-term socioeconomic impacts will look like. As of right now, it seems pretty clear that the pandemic presented itself in a way that shook up Americans. Many used this time to reevaluate their lives and questioned if they were truly happy with the status quo. The data shows that many Americans are looking to make a change.
Even if you’re not looking to reinvent yourself right this moment, there’ll likely be several junctures in your life where you’ll encounter change. During these transitions, it’s always important to keep your estate plan in mind.
That’s because important life events trigger changes that need to be made to your estate planning documents. Whether it’s a new job, marriage, divorce, buying a house, or having children, you’ll almost always have aspects of your estate plan that need to be modified or updated. Our lives are dynamic, and our estate plans should be treated as such too.
Although this might sound difficult, don’t worry — it’s not. At Trust & Will, we make estate planning easy, convenient, and affordable. That means you can set up an estate plan with ease if you don’t have one already, and you won’t dread making updates when you can rely on a system that’s appealing, intuitive, and organized. Check out how to get started today!
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