Chris Castaneda worries about his job. An Anchorage resident, he has been with the Bureau of Land Management for less than a year. “I’m afraid he’ll be furloughed, but he could also be fired,” Castaneda said. “At the end of the day, it’s overhead.”
The fear of losing a job is stressful for almost everyone, and 2023 has been the year of layoffs for many. In the tech sector alone, nearly 200,000 workers lost their jobs between January and May. Other tech giants, including Meta and Microsoft, have said they intend to cut positions again this year.
Losing a job is especially hard for the 63% of Americans who live on their paycheck and don’t have the financial cushion needed to survive a period of unemployment.
Fortunately, Castaneda, his wife and young daughter are not among those Americans. Accredited Financials of Anchorage Since starting working with his planner Kassi his Fetters, they’ve cut costs and become more intentional about budgeting and sticking, about four months without changing their lifestyle. created an emergency fund to cover the expenses of Cutting spending helps keep the eggs in the nest longer, as does the fact that Castaneda’s wife has a full-time job, at least for now.
Reserves, information, communications
Fetters said an emergency fund containing three to six months of recurring spending is central to the plan to survive unemployment. With this in place, a person who fears an impending layoff can have a conversation with his family and discuss his next two key scenarios.
• How long can families continue to live their lives as usual without cutting back on spending or changing how they use their savings?
• How long can your family live without cutting back on your spending or changing other ways you spend your money? This question should prompt discussion about which spending is the most important and which is the least important. Dining at a restaurant may be convenient, but a gym membership is a must.
Customers and their families should also look at where other money is being spent.
“If you have less than three months of money to buy your essentials, you are probably in crisis mode,” says Fetters.
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Fetters also encouraged clients’ families to consider what they would do if they needed to find money or a source of income. This could include anything from selling an investment property to renting an empty room.
“Are you spending a lot of money on retirement savings? Deferred compensation? Consider turning it off until you’re more confident in your work,” says Fetters. The same is true for debt repayments that exceed the minimum required amount. Put that money in your bank account instead.
Taking advantage of retirement early should not be high on the list of potential sources of funding, she added. Customers should exhaust government support options and retirement packages before forcing tax-friendly investments. Debt forgiveness may also be a useful option.
consider an acquisition
Some customers facing potential layoffs may be able to opt for a voluntary acquisition from their employer. Scott Custis, a financial planner at Money Scientific in Hebron, Kentucky, recently helped a client decide whether to be acquired by an employer. The client told him he was 59 years old and told his employer that he had been with him for over 27 years and was going to retire at 63.
“They offered him an increase in the deferred compensation plan to be paid over 15 years from $600,000 to $1.1 million,” Custis said. Furthermore, he was slightly better numerically after working for about three years, but the client still decided to accept the offer.
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“If he refuses to take early retirement, how likely are they to fire him anyway?” Custis asked. “They laid off 8,000 to 10,000 people since April.” Clients may be rehired as contractors for their former employers.
invest conservatively for now
Bay Area financial planner Christy Jiayi Xu said many of her clients are tech professionals who may see the volatile market as a good investment opportunity. She advises against doing so.
“Tech startups may not be the place to put money right now,” she says. Especially when there are indications that the client may not be comfortable losing their investment, such as possible layoffs.
Xu also advises clients to consider stock compensation as part of their compensation plans.
“Many tech professionals are rewarded with restricted stock units by their employers, but some tech professionals are so reluctant to sell their shares that they trust their companies. it is,” she said. “For clients with overly concentrated positions in employer stocks, we encourage them to consider diversifying their portfolios so that their financial health is not dictated by their employer’s financial performance. beyond, it’s too much.”
Don’t forget your health insurance
Losing your job doesn’t just mean losing your income, it usually means losing your health insurance. Workers facing possible layoffs should check how long their employers are willing to sponsor their compensation. When the scheme ends, workers will be able to pay COBRA premiums for up to 18 months and retain the coverage they had while working, but the costs can be high. “Usually, employers don’t subsidize COBRA coverage, so you pay full premiums,” Fetters said.
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Purchasing health insurance on the open market is also a coverage option, as unemployment qualifies consumers for new insurance. A health insurance broker or healthcare.gov helps customers find the right health insurance.
Plan more, worry less
Regardless of whether layoffs eventually occur, customers planning how to deal with unemployment are almost always less worried than they were before they started planning.
“I spend a lot of time helping people go through these stages, and it’s usually a lot less stressful,” Fetters said. “Anxiety comes from not knowing your options.”