By Brian Bloxom, ChFEBCSM
After the turbulent year we’ve all experienced, I think we can all agree that the benefit of a steady job (and thus a steady paycheck) cannot be overstated. And prior to a global pandemic turning the world upside down, unemployment rates were hovering near 50-year lows and jobs were available in abundance. But unfortunately, the coronavirus had a major effect on unemployment—across every state, every industry, and every major demographic group in America. In April 2020, the unemployment rate skyrocketed to an unprecedented high (14.8%), not seen since data collection began in 1948. Although this rate declined to a still elevated level in December of 2020 (6.7%), (1) as it stands right now, layoffs can pretty much happen at any time.
We have seen that some industries fared far better than others in the midst of the COVID-19 fallout. But no matter how secure you feel in your current job, you should at least consider what a layoff would mean for you. If you find yourself unemployed, how do you move forward?
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. (2) 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
A layoff, expected or not, brings about many emotions—shock, worry, maybe even anger—and many financial decisions. So rather than going at it alone, it’s best to partner with an objective third party who can help you think clearly. An experienced financial professional can help you make those decisions which could have long-term effects for you and your family.
We at Sentinel Wealth Partners are here to help you sort through healthcare or figure out if you can afford to retire. Our desire is to help you walk away from your previous job with confidence and anticipation for what comes next. If you or someone you know is facing a layoff, reach out to us today by calling our office at 703-832-0164, sending an email to [email protected], or using our online calendar.
About Brian
Brian Bloxom is an Independent Financial Advisor, Chartered Federal Employee Benefits Consultant (ChFEBCSM), and Chartered Retirement Planning Counselor (CRPC) with 25 years of experience in financial advising. He founded Sentinel Wealth Partners to serve retirees, individuals approaching retirement, and individuals managing complex retirement plans such as company plans or federal benefits plans. His expertise and dedication to helping his clients achieve their goals make him a trusted resource that will help you feel confident in your customized retirement plan. Brian’s mission is to be available to his clients—all the time. He’s here to solve your problems, relieve your anxiety, and give you optimism for retirement. Because ultimately, your retirement should be about well-deserved enjoyment, and not about stress or anxiety. When he’s not working, you can find Brian spending time with his wife, Jessica, and their two sons, Spencer and Preston. He enjoys coaching soccer, serving in his community, golfing, and relaxing at his vacation home at Lake Anna, VA. To learn more about Brian, connect with him on LinkedIn.
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(1) https://fas.org/sgp/crs/misc/R46554.pdf
(2) https://www.job-hunt.org/social-networking/LinkedIn-job-search/LinkedIn-job-search.shtml