By Paul S. McNulty, CFP®
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. Read The Fine Print
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. Create A Plan For 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 take advantage of 401(k) rollover services 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. Make Some Healthcare Decisions
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. Don’t Stop Networking
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. Whether you’re trying to sort through healthcare or figure out if you can afford to retire, we can help. If you or someone you know is facing a layoff, contact us for a complimentary consultation by calling (781) 995-0253 or email me directly at [email protected] so we can help you walk away from your previous job with confidence and anticipation for the future.
About Paul
Paul McNulty is the founder of Boston Metro Advisor with over 20 years of experience helping people navigate the ups and downs of the economy toward the financial future they envision. His education consists of a Bachelor of Science in business administration from the University of Rhode Island and the CERTIFIED FINANCIAL PLANNER™ (CFP®) professional designation.
Paul’s experience and education have made him a multi-faceted professional capable of assisting people with virtually all their financial needs. His services include every facet of retirement planning, from 401(k) rollover services and income planning to wealth management and estate planning. Paul has been active in his community over the years as a youth sports coach. When he’s not spending time with his wife, Cindy, and their two children, who are both recent college graduates, Paul enjoys reading, playing golf, and fishing. Learn more about Paul by connecting with him on LinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
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(1) https://www.job-hunt.org/social-networking/LinkedIn-job-search/LinkedIn-job-search.shtml