Print Page   |   Contact Us   |   Sign In   |   Register
Losing your job
Share |

Loss of employment is tough. If you know it is coming, get prepared by reducing spending and building Emergency reserves.

  • Immediately apply for unemployment benefits. It normally takes a few weeks for them to kick in.
  • Update your resume and build your career network.
  • Are you seeking a position in the same field or is this the catalyst for a career change? If a change is in order, what training or education do you need to be successful?
  • Review spending, be honest regarding what is a need and want. Cut expenses where possible. The length of your unemployment will inform this.

 

NOTE:  Consider scenarios where you are out of work for 1, 3, 6 or 12 months. At what point would you give up additional wants, sell your car, find a cheaper rental or sell your home? When would you consider working part-time or at a job for which you are overqualified?

 

  • Evaluate how the loss of benefits impacts your financial security:  health insurance,  disability insurance and life insurance, etc.  If you cannot be added to your spouse's plan, consider COBRA or other alternatives for health insurance.  You will lose your group disability coverage through your employer.  Contact any insurers regarding the impact of job loss on any supplemental policies you may have purchased.  Most group life insurance can be converted to whole life upon separation.  If healthy enough, you are likely better off purchasing term life from an insurer.
  • If you have at least $5000 in your employer's retirement plan, you have the option of keeping your money there or rolling it to an IRA Rollover account at the firm of your choice.  Since employer plans often pass on high costs to participants, consider a direct rollover to an IRA.  This gives you the flexibility to invest it any way you want as well as to convert balances to ROTH IRAs opportunistically.
  • If you have less than $5000, you will likely be asked to roll the assets to an IRA or have them distributed to you.  Do a direct rollover to an IRA at the firm of your choice.  You may be subject to taxes and penalties if the money is distributed to you.   If the money is sent directly to you, you have 60 days to get it invested in an IRA before negative tax consequences are triggered.  If taxes were withheld, you should try to deposit that amount along with the net distribution.

Henry Wadsworth Longfellow said "We judge ourselves by what we feel capable of doing, while others judge us by what we have already done.”

You may be down, but you are not out. This is just a moment in time. It too shall pass. It can be difficult to accept the loss of a position you were heavily invested in and cared about. Learn from the experience. It taught me humility and forced me to better understand my strengths, weaknesses and what value I bring. Great things can happen. It was a job loss that motivated me to start PlanningforaFuture.com. Better things are in store for you.

Once you are earning money again, prioritize rebuilding your Emergency Fund.

 

Search
Sign In
Sign In securely
Home

My Plan

Join a Group

ADV Part II


F.A.Q.

Blogs

 

Where should I save?

 Where should I invest?