By Vincent Barbera, CFP®, MSFS
We’ve come a long way since the days of rampant unemployment caused by the Great Recession. Unemployment rates are currently hovering near 50-year lows and jobs are available in abundance. But that doesn’t mean layoffs don’t still happen.
In fact, because layoffs aren’t making headlines as often, the reality of a potential job loss and the subsequent stressful life change may be far from your mind. No matter how your employer seems to be doing, you should at least consider what a layoff would mean for you. How do you move forward if you get laid off?
1. Check Those Details
If you are laid off, the last thing you want to do is wade through piles of paperwork and make important decisions that will have a future financial impact. Unfortunately, this is a necessary step. Make sure you go through your HR paperwork with a fine-tooth comb and ask detailed questions about severance pay, remaining vacation and sick time, and unemployment insurance.
2. Strategize Your Employee Assets
You probably have a collection of assets from your years at your job, most likely in the form of retirement accounts or stock options. What are you going to do with them when you are no longer with your employer? Should you roll over your 401(k) or exercise your employee stock options? You need a plan, and a financial professional can help. Someone experienced with your field can help you decide if you should roll over your 401(k) or 403(b), explain how to make pension elections, and walk you through the ins and outs of stock plans.
3. Figure Out Healthcare
You may have several options available to you for health insurance, such as COBRA, private insurance, or Medicare. A knowledgeable financial professional can help you analyze your options to see what is best in your situation. They can also help you strategize the best way to pay the premiums, such as using IRA funds penalty-free in spite of your age.
4. Stay In The Game
Many people decide to retire when they are laid off. If that’s not your plan, you need to stay connected to those in your industry. It will be a lot easier to network and find your next job if you have current connections and active relationships to work off of.
Another way to improve your future job search is to use your extra time to hone your LinkedIn profile. According to a JobVite survey, 95% of recruiters use LinkedIn to search for candidates and 92% post jobs on LinkedIn. (1) If you are going to be looking for a job, LinkedIn is essential. If you want to be competitive, you need to create a robust profile that is up to date and showcases your skills.
5. Cut Back
When you don’t have money coming in, you want to limit the money going out as much as possible. Getting a handle on where you stand financially after a layoff is critical to keeping your stress and anxiety in check. Revisit your budget, factoring in severance or other unemployment benefits, and find ways to cut back on expenses so you have a financial cushion if the job hunt takes longer than you expect.
6. Reconsider Your Portfolio Risk
Review the risk level of your assets. If you are going to be spending some of your investments sooner than originally planned, you may need to get more conservative with your portfolio.
7. Decide When To Take Social Security
The timing of when you decide to claim your Social Security retirement benefits has a big impact on the amount you receive. The longer you wait, the greater your benefit will be. If you get laid off, you don’t want to rush to take Social Security if it’s not necessary.
8. Ask For Help
When you are let go from your job, you have a lot of financial decisions to make. Don’t try to make them all on your own. You will have a lot more confidence in your decisions if you make them with the counsel of an experienced financial professional. At Newbridge Wealth Management, we specialize in guiding clients through transition, whether that’s from a job loss, change in family structure, or simply reaching a new milestone. If you or someone you know is facing a layoff or life change, click here to access our online calendar and easily schedule a free 15-minute introductory phone call, or you can email us at vincent@newbridgewealth.com or call 610.727.3960 to schedule a meeting today!
About Vincent
Vincent R. Barbera, CFP®, MSFS is a managing partner and co-founder of Newbridge Wealth Management, a private financial counseling firm located in Berwyn, Pennsylvania. Believing in a patient, disciplined approach to investment management that delivers value and peace of mind, he utilizes a process-driven approach to financial planning that provides comfort and clarity to his clients’ long-term goals. Along with a bachelor’s degree in psychology and business, he has a master’s degree in business and financial planning and Certified Financial Planner™ designation. Learn more by connecting with Vincent on LinkedIn, or send him questions at vincent@newbridgewealth.com.
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(1) https://www.job-hunt.org/social-networking/LinkedIn-job-search/LinkedIn-job-search.shtml