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Some Smart Money Moves to Make if You’re Hit with a Job Layoff

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Have you ever faced a job layoff? If you have, then you’re in good company. Figures from the Bureau of Labor Statistics show that close to 2 million U.S. workers are laid off or discharged from their jobs every single month. A layoff can come as a shock or a relief, but no matter what, it’s something you have to deal with, and fast.

Recently we came across this article from NextAvenue in which freelance journalist Lucy Lazarony gives her readers several points of advice about what to do if the “layoff lottery” calls your number. We think her advice is pretty good, if a bit basic. But it does seem to us that she’s writing to younger workers who might not be facing the same challenges that laid-off older workers might.

So, we’ll cover Lazarony’s points, then ask Rajiv for special advice for laid-off workers in their 50s, 60s, and 70s. It’s often true that, the older we get, the more difficult a layoff can be.

Retail Clerks and Rocket Scientists: Layoffs Can Affect Anyone

“Almost 2 million people in the U.S. get the bad news every month,” Lazarony begins: “they have been laid off. Whether they are retail clerks or rocket scientists, their bosses have decided that the enterprises will be more efficient without them.”

We know from personal experience that Lazarony is correct when she describes the stress of “being on the receiving end of a pink slip.” She writes, “Paychecks stop coming and each month a new crop of jobless bankers, chocolate makers and other redundant workers scramble to support themselves and their families until they can line up a new position.”

As Lazarony observes, a layoff makes it crystal clear that being smart with money is vital. But, she adds, laid-off workers may not know the best moves to make. In her article, she describes what she calls “the fundamentals.” We’ll cover several of her suggestions.

Layoff Fundamental #1: Health Care Coverage

“Maintaining health care for you and your family is an important financial task. So don’t delay,” Lazarony advises. For her article she spoke with New Jersey-based financial planner Sean Lovison who added some specific suggestions.

“Assess your health care options immediately,” Lovison urges. “If your former employer provided health insurance, consider (paying for) COBRA to continue your current coverage, although this can be expensive.”  You can also check out the marketplace for options under the Affordable Care Act. The important reality: “Health care expenses can be significant and ensuring coverage is critical.”

The best option for a couple – if it’s possible – is to switch to a working spouse’s plan. Even if the cost is high, it might be far cheaper than buying coverage through COBRA.

For seniors, the picture is a bit different. Once you lose coverage, Medicare allows a special enrollment period of eight months for you to sign up for coverage. If you lose employer medical due to a layoff, contact AgingOptions and we’ll make sure to put you in touch with a knowledgeable Medicare pro who can assist you. 

Layoff Fundamental #2: Severance

“If your erstwhile employer gave four or six weeks or more of severance pay, be shrewd in saving and sparing in spending,” Lazarony states. One financial planner she spoke with, Kiersten Peshek of San Francisco, offers specific advice.

“If you receive severance, set that money aside in a high-yield savings account (where your emergency fund is located, if you have one),” Peshek recommends. “Draw from the account on a monthly, semi-monthly or biweekly basis (like a paycheck) in the amount that will cover your typical monthly expenses.”

Layoff Fundamental #3: Unemployment Benefits

Unemployment benefits can be a touchy subject for many seniors who may be too proud to apply. But facing a layoff demands an honest exploration of available resources, and this is one.

“[Unemployment] insurance, which you paid for via payroll deduction, is available at the state level,” Lazarony writes. “It is important to check if you qualify. Unemployment benefits could be the monthly infusion of cash you need to get you through your job search.”

Carla Adams, a financial planner from Michigan, spoke with Lazarony. Adams urges quick action. “File for unemployment right away so you can start receiving benefits to help with your cash flow,” she says. But do your due diligence. “If you receive severance, check to see if your state unemployment office will still pay unemployment benefits. Some states do and some do not,” she adds.

Layoff Fundamental #4: Your Budget

Few things will shake up your carefully-crafted cash flow faster than a layoff. As Lazarony writes, “With your old source of income gone, it is time to reassess your budget.”

Planner Carla Adams urges a lean-and-mean approach. “Go through your budget, latest credit card bills and/or bank account statements and find areas where you can cut back,” she told Lazarony. “Remember, this is just temporary, but go as lean as you can. Great places to potentially cut back include unnecessary monthly subscriptions, meals out and vacations that can be readily canceled.” A robust bit of belt-tightening now can make things easier over time.

Layoff Fundamental #5: Retirement Savings

If you’re under 59 ½, you’ll likely face penalties for withdrawals from traditional IRAs, as well as 401(k)s, 403(b)s and most other tax-advantaged retirement-savings plans. For that reason – not to mention your future needs – it’s best to leave those funds alone so they can continue to grow. “Avoid tapping into your retirement accounts, if at all possible,” Adams says.

Sadly, though, most Americans fail to heed that advice. According to this CNBC article from a few years back, half of Americans have taken early withdrawals from retirement funds. This can be especially hard on older workers who won’t have the working years ahead of them to replenish those funds.

There may be other options available for laid-off seniors. Start Social Security if you haven’t already. Look for part-time work. You might consider a reverse mortgage. A good first step is to meet with a financial planner and get an honest assessment of your situation – including a financial dashboard, something we at AgingOptions always recommend.

Layoff Fundamentals: A Few More Ideas

In her NextAvenue article, Lazarony offers a few more suggestions, but we lack the space to go into detail here. A few of her ideas:

Work part-time, especially if it doesn’t interfere with your job search.

Exercise company stock options if you have them – you may only have a limited time to act following a layoff.

Stay in touch with HR at your old company so they can assist with handling your company benefits.

Eliminate optional spending, especially the big-ticket purchases some of us make to console ourselves. That Hawaii trip can wait, whether or not you feel like “you deserve it”!

Tap into emergency savings.  That’s what it’s there for.

Rajiv’s Take: Learn from the Experience of Others

Rajiv Nagaich has spoken with hundreds of older workers from all walks of life who have faced layoffs. As he points out, responding to a job loss is about much more than money.

“This NextAvenue piece is good advice, as far as it goes,” Rajiv observes. “But it’s really about one thing: money. For a lot of people I know, especially older men who have lost jobs unexpectedly, money is important – but attitude is more important.”

Rajiv explains, “Some older workers, when they face a layoff, they want to retreat to their recliner in front of the TV and feel sorry for themselves. I get that, it’s a natural reaction. But,” he emphasizes, “the ones who overcome the pain of a layoff are the ones who start engaging in the job search the moment they get the bad news. They’re on the phone, their sending emails, they’re texting, they’re letting their network know that they’re on the lookout for something new. These people are the ones who bounce back the quickest.”

Fight a Layoff with a Financial Dashboard and a Positive Attitude

One strong piece of advice from Rajiv, as noted above: while you are still working, take time to work with a financial planner to prepare financial dashboard. “That way,” says Rajiv, “you will know what to do if you ever face a layoff. But no matter what, if you are laid off, work on your budget and long-term retirement plan.  Look for ways to stay productive, even if it is taking on part time gigs till you land something permanent.  This is a great time to think of consulting if you have over 20 years of work experience in your field or work, and are adept at it.” 

Rajiv concludes with a simple admonition. “If you’re laid off, your number one foe is a defeatist ‘woe-is-me’ attitude. No matter how old you are, keep your work skills sharp and maintain a solid network of friends and contacts.  If you’re part of someone else’s network, help them out professionally. Trust me, it’s going to come in really handy one of these days!”

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally reported at

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