Coping with Unemployment: Financial Planning Essentials
Unemployment Journal Day 92: Financial Planning Amidst Uncertainty
This article covers #15 from 65 things to do when you're unemployed: assess your investments and retirement plan and make adjustments.
This is part of a series of journal entries showcasing my journey through unemployment.
Unemployment brings immediate changes to your financial situation
Even if you are able to collect unemployment, there are waiting weeks, so the benefits do not start immediately. If you receive severance pay from your former employer, you need to decide if you will use it immediately or set it aside for later.
You might have a 401K with your employer to which you’ll no longer contribute. You will need to decide whether to keep it where it is, roll it over into another retirement account, or cash it out. Talk to your financial advisor and CPA to determine the best option.
If you were receiving employer-paid health care, you now need to look for other options. The marketplace is a confusing arena, and you’ll need to include the cost of health care in your budgeting.
Your financial advisor will want to know of significant changes to your earning status and potentially make adjustments to your portfolio or your retirement plan.
After almost three months into my unemployment, we met with our advisor last week. We had some major updates to do since we are less than 10 years out on our goals for retirement.
Life is crazy. You just never know how things will turn out. I would have laughed if you had told me seven years ago that my husband and I would be unemployed and without health insurance coverage. We both had good jobs with benefits and a salary in the multiple six-figures combined.
Now here we are, both unemployed — me due to a layoff, my husband due to Long Covid. And we’re carrying our own medical coverage through the marketplace — when we can least afford it.
There is some good news: we have health insurance coverage with a zero deductible, and I have one of the best unemployment plans in the nation — I’m receiving more than double what my colleagues are in other states. We also have a good chunk of change in the bank to draw on.
Our retirement goals have taken a hit these last three years, with my husband being out of work. No work = no 401K investments and no increase in social security benefits. Things have been stagnant, but overall, we are averaging around 11% in our retirement accounts and are close to 50% of our goal.
I’m confident that I’ll obtain some work that will subsidize my side hustle, and hopefully, eventually, my husband will return to work. It won’t be what he used to do, but with some strategic planning and prayers that his health improves, he might be able to work at something less stressful or part-time.
Mary Gallagher teaches women how to declutter so they can make room for what matters. She is the founder of The Decluttered Soul, a thriving Facebook community and membership. After decades of striving, she’s finally found her peaceful, decluttered writing space in a tiny home in the White Mountains of Arizona where the elk sleep under the Milky Way in her backyard. You can connect, stay in touch, and get support on Instagram, Pinterest, and The Decluttered Soul publication.