No one likes thinking about possible layoffs. However, with companies restructuring and shifting left and right, it’s smart to ask yourself, “What would I do if it happened to me?” Preparing now means you’ll be in control if things take a sudden turn, and that peace of mind is priceless.
As a financial advisor, I’ve seen the difference a little planning makes for people facing job loss. From clients being relieved they are laid off because it allows them to transition into a stable retirement without debt vs others struggling to pay their increasing credit card payments after one week without a paycheck, there is no question which situation is better for mental, physical, and financial health. Here are some simple, practical steps you can take today to feel more secure tomorrow.
Get Clear on Your Finances
Track your spending and savings: This is one of the most important but daunting tasks for those without a budget. Write down what’s coming in and going out each month. Look for areas where you can cut back and increase savings.
Build up an emergency fund: Aim to set aside at least 3-6 months’ worth of living expenses. If you don’t already have an emergency fund created, start with the goal of just setting aside $1,000 and work from there. Many small goals are easier to swallow and manage.
A survey done at the beginning of 2024 claims that only 44% of Americans can readily come up with $1,000 cash.
Cut down high-interest debt: Minimize any credit card or high-interest debt. It is easier to manage debt when you’re fully employed rather than income might be unpredictable.
Know Your Benefits
All companies with retirement plans and health insurance options have plan benefit guides. It is easy to ignore the fine print, but understanding the benefits available to you can save you a future headache.
Health Insurance Options: If you are laid off, health coverage options like COBRA or private insurance plans can bridge the gap until your next role. There are many other factors such as time frame for COBRA, COBRA vs private insurance premiums, spouses’ insurance, or if you are over 65 you may go to Medicare.
For family coverage, the average premium of employer and employee premiums adds up to $1,997/month. This is what you would expect to pay on COBRA.
Severance package: This may or may not be offered and the details may vary widely but understanding how past layoffs in your company have been dealt with is important to dealing with future possibilities.
Retirement accounts: Look into what happens with your retirement fund if you’re laid off. You might leave it where it is, roll it into an IRA, or move it to a new plan. Understanding these choices can help you decide when the time comes.
Prepare Your Job Search Tools (Just in Case): Updating your resume and LinkedIn might seem unnecessary right now, but you’ll thank yourself later if you ever need it. Staying prepared doesn’t mean you’re giving up; it means you’re covering your bases.
Control What You Can
Preparing for a potential layoff isn’t about expecting the worst; it’s about ensuring your financial security no matter what. These are steps anyone can take, and I’m here to help for more personalized guidance.
Your job is important, but your financial peace of mind is even more so. Preparing now will give you options, confidence, and a plan.