If you’re planning on leaving your tech job and you’re in control of the timing, that’s a great position to be in. It gives you the freedom to plan ahead for your next step as well as the financial ripple effects that come with walking away from your paycheck, your stock options, and your benefits.
The year before you leave is when smart planning makes the biggest difference. Here’s how we guide clients through it: understanding how long you’ll be out of work, getting your cash in order, managing your equity, and preparing for health insurance once the paycheck stops.
Think Carefully About Your Timeline
The first question we ask clients is simple: how long do you plan to be out of work? Leaving for another job is very different from leaving just to take a break.
If you’re planning to take several months off, say three months or more, we want that entire period of “no income” to fall within one calendar year. The reason is taxes.
Imagine you leave in December, and you don’t start working again until March. That break will straddle two tax years. In one year, you’ll have nearly a full salary, and in the next, you’ll only have almost a full year of income. That can make tax planning more complicated and limit opportunities to take advantage of lower-income years.
Instead, if you wait until January to leave, you can capture all of that non-working time in a single tax year. It simplifies your plan, makes projections cleaner, and can open up opportunities for strategic tax moves, like realizing stock option gains or Roth conversions when your income is temporarily lower.
Timing your exit this way isn’t always possible, but if you have control over when to leave, it’s one of the smartest decisions you can make.
Build Your Cash Cushion Before You Leave
Once your timing is set, the next focus is cash flow. Up until now, your financial plan may have been all about growth, taking proceeds from stock sales and reinvesting them to build long-term wealth. But in the year before you leave, your priorities shift slightly.
We want to make sure you have enough cash on hand to bridge that period without a paycheck. Depending on your portfolio and your existing emergency fund, that might mean temporarily pausing new investments or holding on to stock sale proceeds instead of reinvesting them.
Think of this as buying yourself flexibility. When you know you have a solid cash buffer, you can make career decisions based on what’s best for you — not what your next paycheck demands. It also gives you breathing room to cover any one-time costs that come with a transition, like travel, COBRA premiums, or other life changes.
Review Your Equity: Shares, Stock Options, And RSUs
The next big area to focus on is your equity. All those shares, options, and RSUs that make up a big part of your total compensation.
Start with your shares, because those are the simplest. If they’ve already vested and you own them outright, they’re yours to keep. Your employment status doesn’t affect them.
On the other hand, stock options need more attention. If you have vested but unexercised options, you’ll want a clear plan for when and how to exercise them before and after you leave.
Sometimes, it makes sense to exercise additional options in the year before you go, especially if your income will drop the following year. Other times, it’s smarter to wait. The right timing depends on your tax bracket, how much Alternative Minimum Tax (AMT) exposure you have, and what kind of options you hold (ISOs vs NSOs).
What’s important is that you don’t let vested options expire. Most companies only give you 90 days after your termination date to exercise them, and once that window closes, those options are gone for good. Your financial advisor should help you map out a timeline for exercising options that spreads the tax impact across years when possible.
Finally, pay attention to your RSUs. They stop vesting when you leave, so you’ll want to look closely at your vesting schedule. Are you just a few weeks away from a big vesting date? Or are you already past the steepest part of your vesting curve where most of your RSUs have already vested?
Sometimes, it’s worth waiting an extra month or two to capture a large batch of RSUs. Other times, the value of what’s left isn’t enough to delay your plans. Reviewing your vesting schedule with your advisor helps you decide what makes sense financially.
Plan Ahead For Health Insurance
Health insurance is one of the biggest concerns for clients planning to take time off. The good news is that if you plan ahead, it doesn’t have to be stressful.
We usually recommend our clients to rely on COBRA, which lets you stay on your company’s health plan for up to 18 months after you leave, but you’ll have to pay the full premium yourself. Yes, it’s expensive, but you already know the plan, your doctors, and your network, so that’s one less thing to worry about during your transition.
In the year before you leave, build the cost of those premiums into your cash plan. That way, when the time comes, you’re not scrambling to find new coverage or worrying about the added expense.
If you’re taking an extended break, COBRA can be an ideal bridge until you join another employer plan or transition to coverage through the marketplace.
Pulling It All Together
When we work with clients planning to leave a tech job, we focus on three core areas:
- Cash: Build liquidity before you go so you can handle time off and added expenses.
- Equity: Understand your shares, options, and RSUs, and make sure nothing valuable slips through the cracks.
- Health insurance: Plan ahead for how you’ll stay covered and budget for those premiums.
Every one of these decisions has a tax impact, so the earlier you start planning, the more options you’ll have.
Leaving your job can be a major life change, and when done right, it’s a chance to take control of your time, your finances, and your next chapter.
Thinking About Leaving Your Tech Job Soon?
KB Financial Advisors helps tech professionals and founders make the most of their stock options, RSUs, and cash flow before they move on.
Schedule a consultation to build a personalized plan for your transition.
