Did you just lose your job? Or are you anticipating this big change due to recent layoffs at your company?
Losing a job can present many challenges and significantly impact your future retirement goals. We understand that this experience can be uncertain and scary, but remember, you are in control. Start by taking a breath. Then, follow these steps to get a good handle on what you will face and help reduce stress by putting a plan in place.
1. Assess Your Severance & Benefits
After losing your job, first determine if you have a severance package. If so, ensure you have a good understanding of how it will work, including:
- Compensation payout schedule and frequency
- When the package expires
- Whether or not taxes will continue to be withheld
- Conditions you must agree to in order to receive it
This is also the time to find out how long your healthcare insurance coverage will last and when it expires. Your former employer may offer additional assistance, too, such as job replacement services, so don’t be afraid to ask.
You should also ask if unemployment benefits will kick in once your severance runs out. If you won’t receive severance and are eligible for unemployment, file for it immediately, as it can take a few days to start receiving benefits.
2. Review Your Budget
Next, evaluate your budget and break down your essential expenses (e.g., keeping the lights on, food on the table, and a roof over your head) from your discretionary expenses (e.g., gym membership, travel, eating out, etc.). Ask yourself:
- Where can I cut back to help with cash flow?
- Can I find less expensive stores or brands?
- Can I look for other providers or negotiate lower packages for utilities like phone or internet?
3. Check Your Emergency Funds
A job loss is the kind of unexpected event your emergency fund is intended for. Examine your emergency savings and determine how long they will last once your severance or unemployment benefits expire, building this into your budget.
4. Revisit Your Retirement Plan & Investments
Finally, consider how losing your job could impact your retirement and overall investment strategy. To understand your current plan and additional options, be sure to:
- Log into your employer-sponsored retirement account or call the custodian to find out whether you are vested or not
- Understand your distribution options if unemployment lasts longer than expected and your unemployment benefits run out
- Determine if it makes sense to reevaluate your investment strategy (i.e., Has your risk tolerance changed? Has your timeframe for using the funds changed? Does it make sense to adjust your investments?)
Get Professional Guidance for Challenging Times
When you lose your job, it can feel lonely and stressful—especially because it can seem like so much is out of your hands. But it doesn’t have to be that way! There are options and resources, like turning to your Registered Investment Advisor (RIA) to bounce questions and ideas off of them.
As noted in Step 4, your RIA can help you determine if changes in your investment strategy are warranted. They can also examine your entire financial health and advise you on areas like your spending and savings. For personalized and compassionate guidance, speak with a Carlson Investments representative today.
Carlson Investments does not provide tax, legal, or accounting advice. This content has been written for informational purposes only. Always consult your individual tax, legal, or financial professionals for advice tailored to your situation.
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