Laid off and near retirement–now what?
Many who have unexpectedly lost a job become paralyzed by fear and don’t know where to turn. It’s a blow to one’s self-esteem, and we understand that unexpected obstacles have been put in your path.
Job losses have skyrocketed. Some are laid off and others are furloughed, hoping to return to their jobs when the lockdown ends.
My husband’s own job loss during the 2001-2002 recession was the catalyst for my pursuit of the CFP® designation and the start of a new career.
The number of first-time claims for unemployment insurance would have been inconceivable just a few weeks ago. Think about it. The jobless rate was at a 50-year low of 3.5% in February and the outlook was bright. The Federal Reserve is predicting the unemployment rate could hit 32% in the coming months.
What should you do if you are laid off? You will need a plan.
The ideas I’m providing give a broad-based outline. Your situation is unique, and we are here to assist as you create your own strategy. If your job is secure or you have retired, please feel free to share our ideas with any friends or family members who have lost their job.
- Assess your financial situation. What are your liquid assets outside retirement accounts? How long can these sustain your lifestyle? What are any outside sources of income you may have, whether yours or your spouse’s? Will you receive a severance and paid health insurance? All will play into your plan.
- File for unemployment. Your company has paid into your state unemployment program and the federal government is supplementing that with an additional $600 per week (https://www.investopedia.com/federal-pandemic-unemployment-compensation-fpuc-definition-4802039) through July 31 via the Federal Pandemic Unemployment Compensation (FPUC) (https://govstatus.egov.com/ui-benefits/CARES ). You are out of work through no fault of your own. File! Receiving unemployment will provide you with additional income and cushion cash reserves.
- Come up with a realistic budget. Add your savings, unemployment income, and any additional income (such as the Economic Impact Payment), which will provide you with your total cash available over the next six months. Then, divide your monthly expenses into that total cash number. You may realize that you have greater resources than you had expected.
- Be sure to include health insurance in your calculations. Can you apply for Medicare? Can you add yourself to a spouse’s plan? Do you have access to COBRA? What are the ACA options in your state?
- Consider your options for Social Security. Does it make sense to apply for Social Security?
Next steps
Might you consider going back to work? Could you consult? Would you take a lower-paying, less stressful job? Is it time to tap your retirement accounts?
An unexpected layoff is debilitating. It affects one’s self-worth and can lead to paralysis. Don’t let that happen to you.
These questions and others will help you formulate a financial plan as you navigate an uncertain future.
The steps above are a broad overview. Putting together a plan is critical. It’s half the battle. You may find you are in a much better position than you realized, which will relieve an enormous amount of stress. Either way be proactive, not reactive.
Compass Wealth Management LLC
9 Lincoln Avenue, Ground Floor
Rutherford, NJ 07070
Ph. 201-933-1790 Fax 201-933-1788
www.compasswealthmanagement.net
"Life's a Journey - Make it a Good One"
Advisory services offered through Compass Wealth Management LLC and Strategic Blueprint LLC. Securities offered through The Strategic Financial Alliance, Inc. (SFA), member FINRA/SIPC. Leslie Beck and Martin Siesta are investment adviser representatives and registered representatives of SFA. SFA and Strategic Blueprint are affiliated through common ownership but otherwise unaffiliated with Compass Wealth Management.
