Planning after a job loss

Even with unemployment at the lowest rate in ten years (just over 4% in the United States according to the Bureau of Labor Statistics), many people are facing layoffs and job loss. Just last week I learned of two companies that are reducing or re-aligning their work force, and long-term, productive employees may lose their jobs. Do you know of someone who is experiencing this stress? Having a financial plan can help you navigate the loss of a job.  If you don’t already have a financial plan when you get the news that your position is being eliminated, that is a great time to hire an adviser and make a plan. Here are some reasons why.

Replace panic with a plan

A financial plan helps you outline your goals and identify the resources that will help you meet those goals.  The ability to earn an income is usually the largest of those resources, but it is not the only one.  The savings you have already accumulated are also a resource, as are Social Security, expected pension or investment income, health benefits, and other assets. A financial plan will help you gain a realistic view of where you are with respect to your goals and how much of an impact your change in income will have.  It will be easier to see what steps you need to take to keep you on track. Financial Planning Scenarios

Know your options

Perhaps you have been dreaming of leaving your job or your field anyway to pursue a new passion. Losing your job might just be the impetus you need to take that step.  How do you know whether you can afford to do it? Your financial plan will bring your choices into focus.  Perhaps you can maintain your lifestyle and stay on track to meet your goals with less income.  Perhaps there are some goals you would be willing to forgo in favor of a job that you enjoy more.  On the other hand, maybe you will decide to take a higher-paying job and delay the passion factor for a few more years. Having a plan and seeing the numbers will help you make a more informed decision so you can confidently move on to the next step without regrets.

Dig into the details

A job transition can have many consequences beyond the paycheck.  Employee benefits can vary greatly, as can the cost of a commute and difference in child care needs. The formal financial planning process will help to quantify all those changes and identify the key benefits that may need to be replaced (i.e. is your group term life insurance policy through work your only one?). Working with a planner will reduce the chances that those details go unaddressed. If your employer is reducing its workforce, or if you know someone who is facing job loss, we would like to help.  Read here to learn more about our financial planning service. For more about why it is good to have a plan, even when things don’t go according to plan, read this blog post.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations may vary. Therefore, this information should be relied upon when coordinated with individual professional advice.