What Issues Should I Consider If I Get A Promotion Or Raise At Work?

When you receive a promotion or a raise at work, this may 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:

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, look to potentially increase your savings in areas like your retirement plan, your HSA and others.

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.

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?
If your will receive non-qualified stock options or restricted stock options as part of their promotion, there are a number of planning items to consider.

The 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.