Immediate Financial Decisions To Make After A Layoff
The Guardian newspaper reported in April 2020 that more than 16 million Americans had already lost their jobs in the wake of the deadly coronavirus. Through no fault of their own some people found themselves out of work. With more cuts expected as the pandemic wreaks havoc globally researchers are talking about the psychological preparation that needs to be made in order to handle being furloughed. Financially, there are some decisions you need to make immediately once you’ve been notified of your termination. Let’s take a look at five of these financial decisions.
1. Negotiate your severance pay options
Granted getting fired is something that comes as a shock for most people – an unpleasant one at that. However, in the wake of the news, it’s important to take a step back before signing any papers you have been presented with. Ask for the weekend to have a look over the proposed severance pay package. Most people are not aware that they have room to negotiate this package. If you’re not sure of how to negotiate, get an expert to weigh in and give you advice.
2. Claim unemployment income benefits
Do you know that your employer contributes a monthly portion to the state unemployment income program? What is this program about? It’s designed as a cushion for employees who’ve been retrenched allowing them to seek unemployment income benefits from the state. Claiming these benefits is not something to be ashamed of. In fact, the income provided can help you weather the storm until you’ve secured another job.
3. Rollover retirement funds to a Self-Directed IRA account
Most employees are enrolled in a 401k plan into which a portion of their salary is deducted every month and put into their retirement account. Following a layoff, one of the financial decisions that you must make involves moving these funds from your former employer’s account to a Self Directed IRA account.
4. Consider selling your incentive stock options
Some companies offer their employees company stock as part of their benefits. However, you might be thinking of exercising early and the reasons for doing this may include having lost faith in the company’s future prospects, wanting to diversify your portfolio by offloading some of the company’s stock and trying to avoid being placed in a higher tax bracket.
5. Remain under the company’s health & disability insurance
Healthcare in the U.S. is very costly. It is undoubtedly one of the most expensive in the developed world. In fact, in 2019 health coverage annual premiums for a family of four were estimated at $20,576. Fortunately, employers paid up 71% of the total cost.
Now, this is a really good deal and it wouldn’t be wise to take yourself off your employers cover following the layoff. Under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), a former employee and family members who were already on the company’s plan prior to the employee getting terminated will remain under the employer’s group health insurance plan for a predetermined time.
Discuss your financial decisions with an expert
Perhaps you’re still a little unsure about how to go about making these financial decisions. Talking to a financial expert might prove useful. Reed Financial Group is dedicated to helping you with your career financial transition process. With over 20 years of experience guiding investment portfolios and providing advice on retirement decisions, we’re more than happy to help you during this time.
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