Ep. 110 – 10 Step Layoff Survival Guide
Are you worried about the idea of a layoff happening to you? Whether you’re close to retirement or know someone at risk of getting laid off, this guide is for you.
Covid has made layoffs quite common with everyone but especially with people who are almost at the retirement age. Layoffs can be very stressful but with the right information, you can navigate your way through them.
In this episode of the Secure Your Retirement podcast, we share 10 steps on how to survive a layoff. Listen in to learn the importance of seeking professional help to come up with a suitable retirement financial plan after a layoff.
In this episode, find out:
- Keep calm and take it one step at a time to make the best decision for yourself.
- Determine your living expenses by coming up with a spending plan.
- Create an inventory of your resources/assets to know what you own.
- Add in severance pay – think it through before you accept it.
- Understand how the unemployment benefits work.
- Learn about your health insurance options, especially if you’re unqualified for Medicare.
- Get a new social security estimate to help you decide on an income possibility.
- Consider a lump-sum payment from your pension.
- Determine if you want to go back to work or have enough money to retire.
- Seek professional help to give you confidence with a retirement financial plan.
- “It may be difficult, but you want to leave your employer on the best foot you possibly can.”– Murs Tariq
- “Don’t just quickly accept your severance, make sure that you think that through.”– Radon Stancil
If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!
To access the course, simply visit POMWealth.net/podcast.
Here’s the Full Transcript:
|Radon Stancil:||Have you been laid off and are you concerned? Do you have enough for retirement? What are the specific steps you need to take? Well, by the end of this video, you’re going to gain clarity for your personal retirement plan. And you’re going to have action items to secure your retirement.|
|Murs Tariq:||To learn more about securing your retirement and all the different elements you need to know, subscribe to our channel and hit the bell to be notified when we post a video every Monday. We have helped hundreds of our clients gain clarity and get on the path to a comfortable and happy retirement. Now it’s your turn. Let’s do it.|
|Radon Stancil:||Welcome to our Retirement in Action. We are going to tackle a topic today that has become more and more common in particularly around the whole COVID situation. But this is something that we have dealt with for years and that is what happens if you find out you’re going to be laid off? An early retirement or maybe we wouldn’t even call it an early retirement. We might say, “Oh my goodness, I’ve just been told I don’t have the job anymore or I’m going to need to take an early package. And then what else am I going to do?” And it happened before you think you’re ready for retirement.|
|So we have seen this with folks that are 55, 60 and they’re going, “Hey, I was really thinking I was going to work till 60, 65.” And I will tell you that when this occurs, it is stressful and that makes a lot of sense. I mean, it came without us really being able to plan for it. And so when Murs and I are able to talk to people about this, we try to help them lay out a plan. And so what we’re going to share with you today is what we call our 10 step layoff survival guide. So we’re going to walk through 10 things. Some of these are simple, some of these you might go, “Okay, that makes sense,” but it’s kind of going to help your brain work through what do I do if I get laid off? And I’m trying to figure that out.|
|So we’re going to just take them one at a time and hopefully this will be of some benefit to you so you might be able to just have a checklist. I always tell people this. Remember that on our website there. Don’t worry about having to take notes because we’ve got a blog article written on this particular topic. And so all of these items will be listed. You want to hit number one, Murs?|
|Murs Tariq:||Yep, I will take number one and that is keep calm and take it one step at a time. Now I know hearing the words keep calm could be very difficult to do when you’re getting the notice from your employer, you’re being told that you’re being let go. “And so how on Earth am I supposed to stay calm?” Well, we have seen this happen like Radon has said pre-pandemic and obviously then through the pandemic as well. Layoffs are just part of how the world works these days. And so if it does happen, just know that it’s not the end of the world and that you’ve got options out there. And so you got to be able to keep calm and just kind of think through what are options and not make a rash decision.|
|So that’s part of what this whole 10-step guide is to kind of help you think through some things and help you make the best decision possible for yourself. You want to and it may be difficult, but you want to leave your employer on the best foot that you possibly can. Because we’ve seen it quite a bit through the pandemic where the employer shuts down, but then they were able to open back up somehow. And you want to be able if you would like to return to the employer, keep that bridge alive. So keep calm and take it one step at a time and you’ll be able to get through this.|
|Radon Stancil:||All right, number two. Number two is determine your living expenses. Now you might think about that for a minute and go, “Well, that’s pretty simple,” but take a moment and really think about what do you think your living expenses are? You take that little exercise right now and you’ll go, “Uh, I don’t really know exactly what my living expenses are.” Murs and I get that question or we get that conversation going all the time. And we basically say come up with a spending plan.|
|I always tell people the easiest way to think about at least what the big number is. Now where it’s going that’s a whole different thing, but is think about what you have come home every week or two weeks, however you get paid, monthly, whatever it is how much comes in the door on a month. So after all the 401(k) contributions, taxes are taken out what actually hits your bank account?|
|So let’s just pretend that that is a $7,000. $7,000 comes in net in the door. Now at the end of the month after you pay all of your bills, how much money do you have left over for that month? And if you say zero, then you’re spending $7,000 a month. Now where’s it going? That’s a whole different question. But if you come back and say, “Hey, no, out of my money that comes in every month I actually put 2000 in my money market or in my savings.” Well, then you’re only spending 5,000. But take some time to work that through in your mind. Now there’s lots of different programs out there that you can start to track expenses. One that Murs and I feel is a pretty nice one, it’s called Mint, M-I-N T. It’s free.|
|And you can basically put your credit cards in there. You can put your checking account in there and it automatically brings all that in and starts telling you and showing you how much you’re spending, but also where is it going? What are you spending it on? Are you eating out a lot? Whatever it might be and it just a super big eye-opener. But that’s extremely important to understand what you spend on a monthly basis because that’s going to be a part of how this whole plan comes together.|
|Murs Tariq:||That’s right. And then on the flip side of the coin, we have number three, which is knowing what you have. So create an inventory of your resources. So Radon just talked you through how important it is to be able to know what you’re spending, what’s going out the door. But the other part of it is we got to know what we have to work with and that is our assets, our resources that we’ve created over the years while we were working. And usually in your checking account, your savings account, and then various investment accounts like a brokerage, or maybe a 401(k) or an IRA. Or maybe even a home equity line of credit where you’ve got some access in case of emergencies.|
|And then also if you have a spouse that’s working, know as far as what their income is without your income there as well. So know what contribution is being made on that side to help you out with the overall expense plan. And there have been things that have gone on throughout COVID, throughout the pandemic as far as being able to tap into some resources that you normally wouldn’t be able to tap into. So be thinking about that as well.|
|With your 401(k), if you’re 55 and up, you can actually tap into that earlier than say an IRA, which is usually it’s 59 and a half that you have to wait before you can use that. So a 401(k) can be a very, very powerful asset if you’re under the age of 59 and a half. So the short of it is make a list of all the assets that you have available to tap into to cover those expenses and that’ll help get the process started.|
|Radon Stancil:||All right. Number four is add in severance pay. Now that one sounds pretty simple. Like, “Oh, if I got severance pay I’m going to know about it,” but we got to think about that and not everybody’s going to get severance, but a lot of people do. And there’s some things you want to think through on that. I’ll give you an example. You can sometimes what the companies will do is they’ll say, “We’re going to give you 12 months’ severance.” Very few if I’ve ever seen any company that will give you 12 regular paychecks. What they’re going to do is just give it to you right up front. They’re going to give you a whole lump sum for that whole year.|
|Now depending on where you actually are laid off in the year, the timeframe, it might make sense for you if they give you the option to not take all of it in one year. So let’s just say you got laid off and it’s October, September and you’re later in the year and you’re going to get a whole year of severance. It would probably make sense if the company will let you say, “I want to take some of it now in this year and then I’ll take the rest of it next year.” Now think about why because if you take it all this year and you’ve already earned a bunch of money this year, now you’ve taken your tax rate up and you’re going to give away some of this money that you need to uncle Sam.|
|Whereas if I split it and put it into next year, I’m going to keep my tax bracket lower. So you want to think through. Don’t just quickly accept your severance. You want to make sure that you think that through.|
|Murs Tariq:||All right, number five is understand how unemployment benefits work. Unemployment was kind of designed to help someone out in a time of need usually around a layoff or around a job loss. So know what it takes to be able to qualify for unemployment. And then also know the stipulations as far as being able to continue to receive that over the weeks that you’re going to be unemployed.|
|Usually the average is that it’s going to give you about 40 to 45% of what your weekly pay was. So say your weekly pay was $1,000 a month. You could expect around 400 bucks. I’m sorry, $1,000 a week. You could expect around $400 a week coming from unemployment. So understand that process, understand how it works as far as being able to continue receiving it. And then that’ll kind of get you a baseline of income to help you start making some other major decisions when it comes to layoffs.|
|Radon Stancil:||All right, number six, learn about your health insurance options. I will say of things if you happen to retire before 65, not eligible for Medicare, health insurance can be one of your biggest expenses. We are seeing many of our families. Let’s say there’s two of you or let’s just say per person spending over $1,000 a month for health insurance per person. And so that can be really difficult. And the other aspect is how good are the benefits? So what you want to make sure that you remember if you’re thinking about this before you go stress out too bad, many companies, well, all companies for the most part are going to allow you to get what are called COBRA benefits.|
|And that means you’re going to be able to keep your current health insurance plan for a period of time. And you want to make sure you understand what those options are. You also want to if you have any type of accounts your company offered while you were able to put money in, you can actually use some money from there to pay the health insurance premiums. Because you will have to pay for the COBRA, but at least you’ve got the coverage. So you want to understand your COBRA options. And then if you do not have COBRA or once that runs out, then we would tackle a different aspect of health insurance and go out and shop.|
|Murs Tariq:||All right, number seven is get a new Social Security estimate. If you’re in your 60s that you’re going through this layoff event, you can start Social Security as early as 62. If you’re deferring, it continues to grow until age 70, but you can start it as early as 62. There are some caveats that we need to think about there when we are taking it before what they call full retirement age and usually that’s around age 66 or 67. The first thing is to know what your numbers are and know what your 62 is, know what your full retirement age, know what your 70 is. And you can do that by going to ssa.gov. And you can create an account online there and you’ll put in some information, and they will kick out what your estimates are. But that’s going to help you make a decision as far as the possibility of an income stream.|
|Now you don’t want to make this decision lightly because pretty much once you make that decision, you’re kind of stuck with it to a degree. So you want to be able to think that through. And really this is where we would say you want to be able to think that through with someone so that they can look at the entire picture. So a whole comprehensive or a holistic view if you think this layoff is going to be very short-term and you’ve got ideas as to what you’re going to do next to generate income. Well, maybe it doesn’t make sense to take Social Security early.|
|But if you’re thinking that, hey, this is the layoff that you may have been looking for and maybe you did get that six months of severance, and now you really just want to be done. Well, it could make sense to go ahead and start taking it a little early. It all depends on the situation, which is why I say get your numbers and then potentially get someone involved to help you make the decision around Social Security.|
|Radon Stancil:||All right. Number eight, consider a lump sum payment. Now if you are a person who has the privilege of having a pension, the way a pension works is a lot of times you have to wait to a certain age before you can actually start getting the payments. But you may have the ability to get a lump sum payment from that pension. And you would be able to roll that over into your IRA, which now means you can manage that IRA and have those that benefits grow and then take money as you need it.|
|We always encourage people to do an analysis of the pension payout versus taking the money lump sum and then you know. You know which one’s the best. So just keep that in mind if you actually do have a pension.|
|Murs Tariq:||All right, number nine is determine if you actually want to go back to work. It’s very common when it comes to the decision of retirement or even around layoffs is, “Do I have enough money to actually retire because of this layoff event or just to retire early or retire happily, do I have enough money?” And you don’t really ever know that answer until you sit down and you go through the work of knowing what your assets are, knowing what your expenses are. And coming up with this overall plan what we call a retirement financial plan that really takes you through, “Here’s where I am today and here’s my look 10 years from now, 20 years from now, 30, 40 years from now. And does the plan work?”|
|And once you have that plan built out, well, that’s going to help you answer whether or not you need to go back to work. And for a lot of times when someone is laid off, they don’t realize how good of a job that they actually have done when it comes to building up their nest egg. And maybe they do not have to go back to work. But what it does is gives them the power now to make a decision. “Hey, do I actually want to work or do I want to go ahead and start my retirement early?”|
|If you know the numbers, this decision becomes a little bit more fun because you get to do what you want to do rather than this old feeling of, “I don’t think I’ll ever be able to retire because I just don’t think I’ve saved enough.” Well, if we sit down and again, you can do this yourself or you can sit down with someone who does this for a living and work the numbers and see if it’s possible. Well, then the decision becomes purely what you want to do.|
|Radon Stancil:||All right, number 10, seek professional opinion. Now that might sound self-serving from folks that help people do this, but here are the facts. You’re looking at this scenario, a very stressful situation and being able to have somebody else who can give you a second opinion, be able to look at the plan, look at what you’re looking at, it just gives you confidence. I will tell you out of all the things that Murs and I do, when we actually help people build out a retirement financial plan, we put it up on the screen or we share it with them. It is the time at which their stress goes way down. Why? Because they’ve spent a little bit of time. They have something in front of them that gives them a little bit of a roadmap, a little bit of an understanding of where they’re headed and the stress just goes away because now they go, “Okay, if I need to work longer at least I know it now. I know what I need to do in order to accomplish it.” Or many times people go, “Wow, maybe I don’t have to go back to work. I didn’t realize how this looked or how it worked.” So at least look at it from the perspective of getting a second opinion.|
|All right, well, we’ve hit 10 items to help you have a survival guide if you get laid off. We hope that’s been a help and a benefit to you. We certainly do appreciate you listening to us today. Again, don’t forget to go to the website. There’s a blog article on this very topic and hopefully it can be a resource for you or for somebody else that you might know, but we appreciate so much you listening to our show today. We look forward to talking to you again next week.|
|We hope this video has given you some confidence and clarity as you plan for a worry-free life in retirement, but what else do you need? We have created a complimentary video course called 3 Keys To Secure Your Retirement. This video walks you through step-by-step what you need to do to get ready for retirement. You can also check out our podcast called Secure Your Retirement. You can subscribe below.|
|Murs Tariq:||For more retirement tips, watch this video “Create Your Retirement Income Plan.” Also, click here to subscribe to our podcast Secure Your Retirement. If you liked this video, hit the like button and be sure to subscribe and share it with your friends.|