Five Ways Forward If You Just Lost Your Job
Retirement Daily Guest Contributor
By Chad Ensign
When the economy goes sour – or a particular business faces trouble in an otherwise good economy – many employees receive the unsettling news that their services are no longer needed.
Just like that, they are jobless.
Maybe it wasn’t that big of a surprise. Maybe it was a shock to the system. Regardless, those who don’t have a hefty emergency fund stashed away may need to get moving and quickly.
But get moving how? Instead of flailing around directionless, or sulking in silence, here are five positive steps you can take as you work to get your life back on track when you’ve been laid off.
Evaluate your Budget
With your regular income coming to a halt, you need to do an appraisal of where you stand financially. The paychecks stopped, but your costs of living didn’t. Take a look at how much money you will need to pay your bills over the next three to six months. Then look at your savings and any other sources of income you might be able to tap into. Do you qualify for unemployment benefits? Will your employer provide a severance package? Can you work at a part-time job in the interim while you seek permanent employment again? You need to take a good reckoning of where you stand.
Review your Health Insurance Situation
This can be a major concern because health insurance typically is connected to a job. The first thing you want to do is figure out when your current insurance lapses. Often the coverage will continue through the end of the month, but sometimes it might end effective the next day. Find out if you qualify for the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows you to keep temporarily the health insurance you had with your employer. The cost of COBRA, though, can be out of reach for many people. Fortunately, there are other options, such as private health insurance or Christian health-sharing services, you can consider.
Use your Time Wisely
You now have a lot of time on your hands, so don’t let it go to waste. Update your resume. Network. Get fit. Take a class to upgrade your skills or to get a professional certification. Stay busy and stay focused on things that will keep you mentally and physically healthy while also putting you in the best position to find another job. Most jobs come from interacting with other people, so the more people you talk with and the more activities you participate in, the more likely you are to find a new job. You might even look at this as an opportunity to shift into a field you have a greater passion for than your previous one.
Consider What to Do with Your Retirement Accounts
If you have a 401(k) with the company that just laid you off, you have a decision to make. While you could leave the 401(k) where it is, you might want to consider rolling that account over into an IRA where you will be able to continue to make contributions to it. Also, if your unemployment situation forces you to tap into that money sooner than you originally planned, you may be able to take advantage of the IRS Rule of 55 exception. Usually, you face a 10 percent penalty if you withdraw money from your 401(k) before age 59½. But if you’ve been laid off, fired or even quit your job, the Rule of 55 lets you make a withdrawal as young as 55 without a penalty. Another IRS rule to explore is a 72t withdrawal, which also allows you to avoid the early withdrawal penalty if certain criteria are met. Remember, though, this is money you set aside for retirement, so cashing in on it should be a last resort.
Talk to a Professional
You’ll likely be dealing with a lot of uncertainties, so it’s always good to consult with people who have experience in these fields that tie in with the concerns you are facing. A financial professional can offer advice on making the moves that would be most suitable for your particular situation. A career counselor can help you improve your resume and prepare for job interviews. Find the right people who can help you with the next steps.
Losing your job can be deflating, demoralizing and frightening all wrapped into one. If necessary, give yourself and your psyche a day or so to process what happened and to properly lick your wounds.
Then get to work righting yourself. A positive attitude and positive actions are your best tools for seeing yourself successfully through this next stage of your life.
About the author
Chad Ensign, founder of Ensign Wealth Management, is a financial professional focused on helping clients work toward their retirement dreams through a well-thought-out strategy for retirement income. He founded his independent company to better serve clients by providing a wide range of products. Ensign has passed the Series 65 exam and is an Investment Adviser Representative. He also is a Retirement Income Certified Professional (RICP). He holds life and health insurance licenses in several states, but his primary focus is in Arizona, Utah, and California.