Few events are more stressful and disruptive than an unexpected job loss or layoff. For many, it’s a hit not just to your finances but also to your confidence. Whether or not a job loss or layoff comes unexpectedly, you may have more choices than you think. Here are a few things to consider:
Emergency Fund
It's a good idea to set aside 3-6 months of living expenses to help through tough times. It can be emotionally challenging to tap into these hard-earned funds, but using what you have on hand can be a better option than taking on debt. This cushion can help prevent a temporary setback from becoming a longer-lasting problem.
Family Budget
If your income has changed, your budget may need to change, too. Expenses like housing, utility, groceries, and healthcare may have fixed payment schedules, but you can manage dining out, entertainment subscriptions, and personal travel.
Health Insurance
For some, one of the most critical benefits of employment is health insurance. COBRA “continuation coverage” may be available to help you temporarily maintain your existing coverage, but the cost may be higher than you expect. Review all of your options including the healthcare exchange at healthcare.gov. Other changes in your circumstances like getting married or having a baby can also make you eligible for a Special Enrollment Period, which allows you to enroll in health insurance outside the yearly Open Enrollment Period.
Unemployment Benefits
You may be eligible for unemployment benefits. This financial support is designed to help while you’re looking for new employment. Make sure you understand and follow unemployment benefit requirements, which can be complex.
Networking and Upskilling
You may never have a better time to explore career possibilities and develop both new and old skills. Consider attending industry events, joining online forums, and reconnecting with former colleagues. Online and in-person courses can be a great way to add certifications and other highly desirable capabilities to your resume. Don’t forget to brush up on interviewing skills, too!
Employer-Sponsored Retirement Accounts
After a job loss, you may need to make some choices about what to do with your retirement plan. Generally, you have four basic options:
You can leave the assets in the old employer’s plan (if the plan permits it).
You can roll the assets over into your new employer’s plan (if one is available and the plan permits it).
You can roll the assets over into an Individual Retirement Account (IRA).
You can take a cash distribution (and deal with the potential tax consequences).
Each of these options has some advantages and disadvantages to consider. You might want to discuss your situation with your (former) human resources professional and a financial advisor so that you can explore all your options.
Reassess Your Goals
When your life changes, your goals and strategies may change, too. A job loss or layoff may require a temporary adjustment to your financial situation but may also open up new opportunities. Your retirement timeline and savings target may change, but keeping up with your long-term commitments can help you stay focused and motivated in the short term.
We would be happy to help you reprioritize your short-term and long-term financial goals. Schedule an Introductory Call to discuss what you want to accomplish and to see if we are a good fit.