Job loss or change—expected or not—can bring unwanted stress. It will almost certainly bring a change to your personal financial picture. Whether it’s cash flow, insurance benefits, or retirement planning, you’ll need to make adjustments. Here are a few tips to help ease the burden of a job transition.
The first thing to do when you are without a job is budget. If you follow Dave Ramsey or our financial planning recommendations, you ought to have saved between three and six months of expenses. This should ease stress you might face if you were unable to meet your immediate needs. You’ll need to cut out all unnecessary spending to make this savings last as long as possible. For example, start eating more meals at home, spending less on entertainment, and ultimately avoid purchasing items that are not of necessity. If you have not started to save now, this blog will show you how to create some extra margin to do so!
When you lose a job, there are a few different options with health insurance. You can continue on your work plan, or you investigate other choices. Losing a job makes you eligible for a special enrollment period with other traditional health care plans. You can take this time and review what is best for your family. If you are unsure, talk with a health insurance agent who can review options with you. These days, insurance is overwhelming, so we have designed the process to be as simple as possible. We also recommend maintaining a life insurance policy that is not tied to your employer. That way, should the situation arise, your family is still protected.
A change in jobs will normally mean adjustments to your retirement plan. Whether it’s a modification in pay, retirement benefits, or a mix, it means reassessing your strategy. Once you have left a company, you have the ability to move your retirement plan. If you have ever changed jobs and still have a 401k with a previous employer, talk to us about a rollover. It can be advantageous to complete a rollover because:
- Employer investment options are normally limited. When you roll your account to an IRA, you have the ability to invest your account however you choose. This could potentially increase returns while lowering fees.
- You can convert from Traditional to Roth. Many times, this can save you future taxes. Check out our blog post on how this can benefit you.
It’s also good to reassess your saving goals at this time. You might need to make adjustments to your savings plan based on variations in social security projections or income from your new employer. This can keep you from having an unpleasant surprise at the end of your career.
If you have recently experienced a job loss or change, we would be honored to partner with you in your finances during this period. Schedule a meeting today!
Jeremy Sharp is the Director of Financial Planning at Stewardship Financial. Jeremy loves helping people figure out ways to organize their financial life and make better decisions with their money. Jeremy and his wife have two boys and is an avid fan of New England sports.