There's been much talk about whether Australia will experience a Great Resignation. If you are thinking about job-hopping, you may want to check you have the finances to cope with an extended career break.
The term the 'Great Resignation' first came about in the US and refers to the millions of workers who are voluntarily leaving their jobs after rethinking their work-life balance during the fallout from COVID-19. A survey by Microsoft found more than 40% of the global workforce is considering leaving their work in 2021. Much of this is a response to wanting a less stressful role, such as one with fewer hours, or one that is more meaningful. Most of the workers in the Microsoft survey said they felt overworked, while 39% said they felt "exhausted".
With the Great Resignation being driven by how people think about the role of work in their lives, Gartner behavioural scientist Aaron McEwan says the psychological contract between employers and employees is changing. "Pandemics reshape society at fundamental levels," he says. "And today's employees want to see what employers can do to enrich their life experiences, rather than just the experiences they have at work."
But whether Australia experiences a Great Resignation or not, if you are considering leaving work there's some important initial steps to take.
Pros and cons of quitting your job
First, work out the pros and cons of leaving work, both from a financial and lifestyle perspective.
Money moves to make before quitting
Before handing in your notice, it's important to understand your financial needs and whether you can service them. This is more than just adding up what you have in your investments and savings. You need to include all your debts, whether you own your home and what your current and future expenses will likely be.
There are online calculators available to help you work out how much you need to live on, such as these here. What people need is different for everyone. If you're planning on quitting your job to retire early, the Association of Superannuation Funds of Australia releases figures around estimated annual living costs, which can help you benchmark what you may need for either a modest or a comfortable retirement.
If you don't have enough to support yourself while you're looking for a new role, some of the actions you could take before you quit include:
How a career break affects your super
One point to be aware of if you quit your job is the impact it has on your super. If you're not working, it's unlikely you'll be able to make super contributions, which means you'll have less when it comes time to retire.
If you're between jobs, it's a good idea to put some strategies in place to ensure your super is still being taken care of. This could include having your spouse make a contribution on your behalf, which may result in a tax offset for them. Your partner may also be able to 'contribution split' by paying some of their before-tax super contributions into your account. Another option before you quit is to salary sacrifice some of your salary into super.
Make sure you seek advice for any of these strategies and make yourself aware of any limits, thresholds and key dates in the financial year as anything you pay into super will be locked away until you retire and you may need it while you're off work.
Redefining work for better work-life balance
A break from work can give you time to think about what it is you want from your job. Some of the things you may want to consider before you enter the jobs market again is how you can redefine your work so you get the work-life balance you want. Achieving this can play a big part in improving your mental health. Some considerations when looking for a new job include:
Working from home, something we're doing more of, can help with achieving a better work-life balance, as can working fewer hours.
While the Great Resignation may or may not become a trend in Australia, it doesn't hurt to reassess your job to see if it's giving you what you need for the life you want. And if you do decide to pack it in for something different, make sure your finances are set up to support you while you're looking.
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