Updated 12/1/2023

When a client receives a promotion or a raise at work, this event can come with a number of changes that might impact their financial situation.

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

Cash Flow and Income

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

Employee Benefits

• In the case of a promotion, does the new job come with added benefits they 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 the client now have added benefits, such as stock-based compensation, deferred compensation, and/or an equity position in their company? If so, there are a number of planning issues to consider.
• Will the client’s higher income affect their ability to make contributions to a Roth IRA or deduct contributions to a traditional IRA?
• Be sure the client is fully funding their employer-sponsored retirement plan.
• If the client will receive stock options or restricted stock as part of their promotion, there are a number of planning items to help them through.

Tax and Insurance Planning

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

This is a comprehensive checklist of the types of issues that advisors should be discussing with their clients who receive a raise or a promotion at work. This change can have a great financial impact, and your planning can help the client make the most of this career advancement.