In 2018, a total of 538,659 people were laid off from their jobs. 1 You might think that with unemployment sitting at a low rate of 4%,2 job cuts wouldn’t be rising, but the 2018 total was up 29% from 2017.3 Regardless of the reason for the layoffs, that’s a significant amount of people who experienced an unexpected and stressful life change. Downsizing has become a way of life in today’s economy, as institutions and organizations desperately try to keep up with technological advances, changing markets, and financial woes. 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 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. Evaluate Your Healthcare Options
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. 4 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. Be Conservative With Your Spending
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. Determine 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, I can help. If you or someone you know is facing a layoff, reach out to me today at (949) 221-8105 x 2128 or michael.loo@lpl.com so I can help you walk away from your previous job with confidence and anticipation for the future.
About Mike Loo
Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to make a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at michael.loo@lpl.com.
Mike Loo is a registered representative for LPL Financial (LPL) and an Investment Advisor Representative (IAR) for Trilogy Capital (TC). Securities offered through LPL, Member FINRA/SIPC. Investment advisory services offered through TC, a Registered Investment Advisor. TC markets advisory services under the name of Trilogy Financial (TF), an affiliated but separate legal entity. TC and TF are separate entities from LPL.
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(2) https://tradingeconomics.com/united-states/unemployment-rate
(4) https://www.job-hunt.org/social-networking/LinkedIn-job-search/LinkedIn-job-search.shtml