As we’ve seen in recent months, layoffs are an unfortunate reality of the working world. While layoffs can be an emotional process and can unleash a variety of doubts and fears, they don’t have to spell disaster for your financial well-being. Whether you’re climbing the career ladder or eyeing the horizon of retirement, strategic financial planning can serve as your lifeline, ensuring that you stay afloat and even thrive in the face of adversity.
Here are a few things you can do to secure your financial plan in the face of a layoff:
Learn About Your Severance Package
Understand the details of your severance package, if offered. This may include severance pay, extended benefits, and any other compensation you’re entitled to. It may be worth it to negotiate your severance package if you know you will need additional support post layoff. Be sure to ask any important questions about ongoing health coverage, stock options, etc.
Trim Non-Essential Spending
Review your monthly expenses and identify areas where you can cut back. This might mean postponing large purchases, canceling unnecessary subscriptions, or pausing certain high-ticket plans.
Review Your Health Insurance Options
If your health insurance is linked to your employment, now is the time to review the options available to you. Many severance packages include extended insurance coverage but it may also be worth investigating alternatives to see what works best for you. various alternatives suited to your needs.
File for Unemployment
While unemployment might not be available to everyone, it can help to cushion the blow while looking for new work. Do not wait to apply for unemployment as it could take some time to be approved.
Consult a Financial Advisor
This is a critical time to get professional advice. A financial advisor can help you navigate your options, whether it’s restructuring your investment portfolio, considering part-time work, or consulting to supplement your income.
For the Younger Workforce
For individuals early in their career, a layoff can feel particularly destabilizing, interrupting what is often a critical period of career growth and financial planning.
Check on Your Emergency Fund
Hopefully, you’ve established an emergency fund. If not, shift your focus to putting money into a savings account to prepare for times like this. Aim for three to six months’ worth of living expenses to cushion against future uncertainties.
Review Your Investment Strategy
hile it’s wise to avoid drastic changes based on short-term market fluctuations, ensure your portfolio aligns with your long-term financial goals — and be sure to let your financial planner know if those goals have changed.
For Those Nearing Retirement
A layoff close to retirement can seem like a direct threat to retirement plans. However, with thoughtful planning, it’s possible to mitigate the impact and secure your financial future.
Revisit Your Retirement Timeline
Connect with your financial planner to re-evaluate your retirement timeline in light of changes to your income. Be sure to review your retirement accounts, Social Security benefits, and personal savings to gauge your financial standing and make a plan for the future.
Facing a layoff at any stage of your career is challenging but working with your financial partner can help avoid financial instability. For the younger generation, it’s an opportunity to reassess and strengthen your financial foundation. For those closer to retirement, it may mean fine-tuning your plans to ensure a comfortable future. Regardless of your age, adaptability and proactive planning are your best tools in turning a layoff into a stepping stone for future success.