It goes without saying that a lot of people have already been laid off at this point with millions more who are worried about losing their job in the coming weeks and months. As of this past week, the job losses have totaled over 40 million, almost 20% of the labor force right here in Ohio are collecting unemployment benefits, and the numbers are starting to rival that of The Great Depression.
So, what steps should you take if you’ve been laid off or furloughed – or if you think you might be facing a potential layoff in the not-too-distant future?
Hopefully you’ve already saved up an emergency fund, but if not, think about whether you have access to tax-free, penalty-free money that can be used in the case of emergency. Examples would be CD’s at the bank, or even your Home Equity Line of Credit (HELOC).
Thanks to the CARES Act, you can now borrow 100% against your 401k, up to $100k of the vested balance, and these loans can be delayed for up to a year. In addition, if your 401k doesn’t allow for loans, you can now take penalty-free distributions from both 401k’s and IRA’s. Per the CARES Act, the normal 10% IRS penalty has been waived as a result of the coronavirus pandemic, and while you still have to pay taxes, they can be paid over three years instead of being forced to pay them all on April 15th, 2021.
Keep your expenses as low as possible and review your budget to see if you can avoid any expenses that you don’t need. Think “wants vs. needs” here. Instead of going to Starbucks, make your own coffee at home. Think about whether you really need cable or streaming video. What subscriptions are you not using currently that perhaps you could turn off?
While employees who have been furloughed fully expect to regain employment at some point in the future, there’s always the chance that positions could still be eliminated as the aftershock of the coronavirus continues to decimate businesses and non-profits.
Furthermore, the economic shockwave could very well trickle down to the public sector as well. So even if there’s 99% probability you get re-hired, “stay ahead of traffic” as opposed to sitting in the middle lane on cruise control, watching everyone else pass you by. After all, being proactive could result in finding the next big career move of your dreams… but won’t find it if you don’t look!
Once you know you’re being laid off (or even afterward), find out if you’re going to get paid for unused vacation time. Find out if there will be any final 401k matching – or employer-provided contributions into your retirement plan. If you’re worried about paying tax on a lump sum vacation time payout, sometimes you can defer a portion (or all) of the lump sum into your retirement plan, thereby avoiding the taxes you’d otherwise pay.
Talk to HR about whether your health insurance can be continued. Sometimes, part of a severance package might include continued health insurance for a predetermined period of time. If not, there’s always COBRA, which can cover your health insurance needs for up to 18 months, but it can tend to be extremely expensive, since your employer no longer pays for their portion (i.e. – you have to pay for 100% of the premium on your own). Other options would be to consider government health care, or a high deductible “catastrophic” plan that gets you through your transition between employment.
As soon as your last paycheck posts, file for unemployment. If you get a severance, you would have to wait, but again, part of severance packages can include healthcare costs, in addition to monthly income, or a lump-sum payout. If you receive the latter, be careful! A lump sum of cash can feel comfortable sitting in your bank account, but without proper budgeting, it can be spent faster than you realize!
Do you have stock options? Talk to your HR department and find out how much time you have to exercise them. There’s a chance that your options still have strike prices below current market value of the underlying stock today.
First and foremost, file for unemployment anyway! Some states are allowing unemployment benefits to be granted for companies with temporary closings. However, if you are quarantined due to COVID-19, but intend on coming back to work, you could qualify. In addition, if you’re deemed “high-risk” of infection (so you’re forced to go home – OR take care of someone else), then you could also qualify.
The CARES Act expanded unemployment to part-time employees, freelancers, independent contractors, people who have a “side-gig,” and people who are self-employed.
What’s even better? The Act also added an additional $600 per week, on top of the “normal” unemployment benefits you’d typically receive, and this additional benefit lasts through July 31st.
As an FYI you can expect your first check to arrive roughly 2-3 weeks after filing, but it’s highly recommended that you fill out the direct deposit forms because the unemployment offices are bogged down and physical checks could cause a delay in you receiving your benefits.
Call your mortgage company to ask for a deferral in payments and see what programs they have. Some mortgage companies are offering a delay in payments with re-amortization. Others are just offering a delay and “catch-up” later. If you own commercial property through the SBA, there is a six-month mortgage forgiveness program that you should look into (the SBA might literally pay for your principal and interest for a full six months).
Be sure to call your utilities companies and let them know you’ve been laid off. Some are offering programs to make paying your bills less stressful. When it comes to your personal and business banking, some banks have been waiving monthly fees, or waiving early withdrawal penalties on CD’s if you need the money earlier, as a result of the pandemic and a job loss.
I’m not telling you anything you don’t already know, but losing your job creates stress, anxiety, panic, and worry. Most people who are laid off never see it coming, but even if you were given advance warning, it doesn’t matter. Going through a layoff or furlough can be gut-wrenching.
To help ease the stress that’s weighing you down, be sure to share what’s happened with your spouse and family. You don’t have to share everything, but be open and honest because you’re going to need the support and encouragement.
And this is important: Don’t feel ashamed and hide anything from your spouse or kids. Remember, it’s not like you were fired for poor performance. We’re in the middle of a global pandemic, which has resulted in the highest unemployment rate since The Great Depression, which took place 100 years ago. It’s not your fault!
When you’re initially laid off, give yourself some time to breathe. As time passes, continue to give yourself time each day to intentionally relax and wind down. Read, relax, and give yourself plenty of “me time.” Exercise! Do push-ups, sit-ups, or air-squats while watching TV. Find an outlet and consider re-discovering a passion that you’ve had, but (ironically) haven’t had time to grab onto because you’ve been too busy… working!
When you get laid off, the first thing on your mind is how you’re going to pay your bills, take care of your family, and a sense of panic sets in. However, there are several people who are either old enough and/or who have saved enough to the point where they could retire early.
So, while some might not think about this, if you reflect on your retirement savings, pensions, social security, and think an early retirement might be a possibility, there’s only one way to find out for sure… by having a comprehensive financial plan constructed. A properly built, written financial plan takes into account all your fixed and variable expenses, future expenses such as vacations, new vehicles, and one-time expenses such as downsizing to a new home.
These expenses are extrapolated into the future and adjusted for inflation, taxes are considered of course, and then we compare them to your retirement assets, savings, and income sources to determine:
There is a lot more that goes into a financial plan, such as tax planning, estate planning (wills, POA’s, healthcare directives, trusts, etc.), insurance planning, and so on. But the bottom line when it comes to retiring early, specifically, is that we need to get this retirement planning piece completed in order to “quit with confidence!”
Now it’s time to look for a new job… and the first thing I’d do is make a T-chart, comparing what you liked and loved about your previous job, and on the other side, write a list of all the things you disliked and hated. Then, to the left column, also add all the things you’d like to have in your new job. Once finished, you’ll have a good idea of what you’re looking for, and like any goal in life, putting things like this down on paper makes the end result more probable than if we just “wing it.”
Go back to your employer and ask for prior performance reviews. While you’re at it, ask if they’ll write a recommendation letter for you so that you can keep it in the documents you distribute to new potential employers. Ask prior supervisors if they’ll be a standing reference for you as you begin interviewing with new companies. All of these things help you stay more organized than your competition, and help you get ahead of the game when it comes to finding that next job.
Update your resume, and if you’re not the best writer, or it’s been awhile since you’ve written a resume, there are several templates online that you can download for free. Microsoft Office also has several resume templates. If you want to go a step further, Google “help writing a resume” and there are also consultants and companies who can help you put together a top-notch resume and cover letter.
Speaking of cover letters, please do not apply for a job without one. As an employer myself, at least this past 10 years, very few people submit resumes with cover letters, and when we see “just” a resume with no cover letter, we immediately feel like the person applying is cutting corners or applying to a million companies and we’re just one of those million. Rather than taking a shotgun approach, find the companies and positions online that you want, and then write a cover letter that caters to that position, the company, and the hiring manager. “Customization” is the key here, and with (literally) millions of people all looking for a job, you’re going to need to find ways to stick your head above the rest.
Get on LinkedIn, update your profile, network with people you know, and get introductions to hiring managers, or people who know and can introduce you to hiring managers. If you don’t connect with people, if you don’t network, and if you don’t ask for introductions, there is a 100% chance that you won’t get any. So, always remember, if you don’t ask, you won’t receive (anything). So, ask!
Consider recruiters or even temp agencies if need be, and whenever you’re applying to a new job, whether it be with the help of a recruiter or not, once you send in your resume, after you speak to someone at the company, after you’ve had an interview, in all these circumstances, send a hand-written thank you card. Hand-written notes are a long-lost art, and I can tell you from personal experience that they’re hugely appreciated, and employers will remember you! So, don’t just apply online – do more!
Considering the economic climate, it might take a while to find a new job, so think outside the box, adopt uncanny patience and a long-term mindset. While you might want a full-time job, maybe look at part-time positions anyway.
Consider doing something outside of your skillset for the time being. While it might be below your “pay grade,” if it’s taking too long and you can’t seem to find a position that matches your professional acumen, look below what you’d normally consider at positions such as delivery positions, warehouse jobs, or positions at grocery stores. Amazon recently made the move to hire 100,000 new workers. Wal-Mart announced they’re hiring 150,000 and recently, Kroger said that they’re hiring 300,000 new employees over the course of the next three months.
These are exceptional times which might call for exceptional measures, and I wouldn’t worry too much about “working downline” hurting your resume. In fact, showing an employer that you’re willing to do anything to take care of your family, even if it means swallowing your pride? That goes a long way in showing character, work ethic, and it holds a pretty special human component as well.
A half-century ago, we were coming out of the biggest Industrial Revolution this country has ever seen. Then, in the 2000’s, we transitioned to a service economy and with the internet, the world changed again. Heraclitus, the Greek philosopher said, “Change is the only constant in life,” and I think this very much applies today.
So, embrace that change, and focus on jobs that are in sectors and industries that are in-demand, such as:
Make a list of companies that are hiring in your area and try to match what’s out there with something within your skill set. Remember, no one graduates, gets a job, and immediately walks into a company knowing how to do it all. You have to be trained, and this is the case with any job or career change.
Once you’ve taken care of all the above, don’t procrastinate on your finances. People have a tendency to let their financial planning go by the wayside during times of job transition because the stress is so overwhelming. Add a recession and then sprinkle a little stock market crash on top, and you get a situation where they say that they “just don’t want to deal with it right now.”
When you’re in-between jobs, you have a lot of responsibilities, on top of trying to find a new job, but you’re not career-hunting 12 hours/day either. So, ask yourself these questions:
One of the top, most procrastinated, but most important tasks an individual or family can complete is the implementation of a proper Estate Plan. So, ask yourself these questions:
If you answered “no” to any of these questions, then there is work to be done on your financial and estate plan, and your “financial house” could use some “home improvements.”
Losing a job is overwhelming, and while I covered a lot here today, there are probably more questions that will come up as time passes. So, feel free to call or email me with any personal questions you have, and I’d be happy to answer them at my earliest opportunity…
…and if you’d like a no-cost 2nd opinion on your financial, retirement, and estate plan, let us know so that we can schedule a 20-minute introduction call to discuss your personal situation and determine whether or not going through our process makes sense for you.Categories: Adam Koos, CFP®, CMT®, Educational Articles