Keep these strategies and considerations in mind.
Bouncing back after a job loss
Recovering from job loss is possible. Explore guidance to help you get back on your feet.
Whether a career change was on your own terms or came unexpectedly, it’s important to assess the impact on your family, beneficiaries and long-term plans. And do what you can to set yourself up for success as you move forward.
Here are a few ways to revive your career should it skip a beat.
Breathe. Don’t panic and make quick decisions you might regret, like immediately taking Social Security or putting everything on credit, which could land you with a lot of high-interest debt later.
Mourn. Even if the move is ultimately your choice, transitioning into an earlier-than-expected retirement means letting go of something you’ve been a part of, perhaps for decades. So give yourself a little time to grieve. Eventually, you’ll find yourself in a clear headspace, ready to tackle the challenge of what comes next.
Reach out. Once you’re ready, reach out to your industry network in person, via email and through LinkedIn. Over a million people get laid off in the United States each year. Chances are you know at least one person who has overcome a job loss or resume gap in the past who can offer advice and practical action steps. Studies show 85% of open positions are filled through networking.
Take care of yourself. As always, rest and eat well, and care for your physical and emotional well-being. Keep your sense of humor and keep busy with books, music, hobbies and social engagements.
Get health insurance. If you’re under 65 when you leave your job, your first priority may need to be finding health insurance since you likely are not yet eligible for Medicare. You may be able to join COBRA, a spouse’s plan or find private coverage. If you’re in relatively good health, ask your advisor if a high-deductible plan could make sense for you. In addition, get all the information you can about your company’s benefits (e.g., severance, unemployment compensation, retiree healthcare, COBRA, pension) as well as your spouse’s.
Don’t leave your 401(k) behind: You’ve got options when it comes to your employer-sponsored retirement plan, including rolling it over, cashing out, taking it with you or leaving it where it is. Consult your tax and financial professionals to make sure you understand applicable penalties, taxes or fees associated with these options.
Create a cash cushion. While no one can truly prepare for the unexpected, hopefully you’ve already taken steps to build up a “rainy day” fund over time with at least six months’ worth of living expenses. If you’re in a position to set aside more, do so.
Avoid additional debt. Assess and adjust your budget, particularly if you were laid off or terminated. With the help of your family and financial team, figure out your expenses, income and liabilities, including unemployment benefits or severance payments as well as healthcare premiums, to determine how much buffer you have to find a new job. Once you land a new job, avoid the temptation to splurge before rebuilding your savings, if applicable.
You’ll want to avoid draining your retirement savings if you can help it. Depending on your age, there could be tax consequences and potential penalties that may not be worth a bit of short-term relief from cash-flow problems. Ask your advisor for help.
If you have large expenses, like a mortgage, talk to your mortgage loan officer about refinancing options or negotiating terms, or discuss lines of credit with your financial advisor to help you add liquidity during your temporary unemployment. Disrupting your investment plan or retirement savings should be viewed as a last resort.
Diversify income. You may not find a full-time job right away. In the meantime, apply for any and all applicable government benefits or unemployment assistance. Consider consulting, temp, shift or freelance work as options until you find the right role. The rise of the gig economy also has opened up more options than ever before.
Update your resume. Weave in measurable accomplishments and quantifiable metrics to reinforce the value of your skill set. If your previous employer offers placement service or CV writing workshops, take advantage to showcase yourself in the best possible light. Polish your skills with workshops and certifications offered at local community colleges or through a local chapter of an industry association. Even volunteering in a related field. Don’t forget to practice interviewing, as well.
Project positivity. A job loss doesn’t negate your accomplishments or years of experience. Surround yourself with loved ones and mentors who believe in you, and focus on moving toward new opportunities.
Consider all possibilities. In some circumstances, losing a job may be a blessing in disguise, depending on your financial situation. You may revel in the freedom to pursue hobbies, chase an entrepreneurial dream or volunteer with your favorite charity. Or do nothing at all, if you so choose.
Losing a job can be challenging for anyone, but there are ways to take control and move forward, with the help of financial professionals. Once you get over the shock of the unexpected, look for opportunities to make the most of your fresh start.
The Financial Advisors at Addison Avenue Investment Services, a division of First Tech, can help you plan for your future whether you’re facing an unexpected job change or early retirement. Schedule a consultation with an advisor today.
Sources: Cake HR; catherinescareercorner.com; jist.com; aarp.com
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