The Pink Slip. It's the dreaded official notification from your employer that they no longer need your services. What's worse is that with the COVID-19, it may not be your fault at all. We've never had this type of health crisis lead to this type of financial crisis. You'll often hear the corporate or small business rumors flowing within your company about the impending layoffs, but you'll never suspect that you might be a person on the hit list…unless you see it coming. We know restaurants, hospitality, travel, airlines, and others are just a few who are going to be the most impacted. We never imagine that we will be that person who gets called in for dismissal time. While getting the pink slip is an awful feeling, it's also a phase in your life where you need to immediately get your financial act together. Especially in a time where unemployment could reach double digits.
When is Your Last Paycheck?
Many people don't ask this very simple question when they get the heave ho from their employer. You will want to ask specifically when your last day of work is and what the expectations are of you over the next 30, 60, or 90 days. If you are furloughed, then get specifics as to what benefits are available to you and when your employer believes you can return to work.You should ask about vacation time or PTO or other types of benefits that may or may not be converted into money. See if you are eligible for any type of severance and then gain a full understanding of when your last paycheck will be deposited so you can plan backwards. Be very careful because sometimes your employer may want you to sign a release of claims letter to get some final monies and be sure to have an attorney review that letter before you sign on the dotted line.
Time to See the Doctor
Health
insurance is one of the biggest items for consideration during a layoff.
You should make all doctor visits before you separate from service with your
current employer. Even though doctors'
offices (some will be closed) will tell you to only come is for essential
needs, this may be the lowest cost your insurance will be for the rest of the
year. You should get the details of what happens to your health insurance
plan if you get laid off. Are you under COBRA or state continuation?Will you have to go to the exchange? Do
you understand what the cost of COBRA would be to your family? In many
cases you will have to pay the full premium which could be very costly to your
family. Can you switch to your spouse's insurance? These are
important details to sift through especially if you are halfway through your
yearly deductibles and may be switching over to new insurance. Of course, you also want to take care of
dental and eye doctor visits as well.
Which Insurance Policies are Portable?
If
you have policies including life insurance or disability insurance, you should
call your benefits or human resources department and find out which policies
are portable. By portability, I mean having the ability to transfer a group
policy into an individual policy. Perhaps your life insurance has
changed since you started with your employer? What will the costs be for
converting the policy into a personal policy if the corporate allows for
it?Should you apply for individual
life, disability, or long-term care insurance before your employment is up? Can
group coverages last while you are receiving a severance check?
What are the Options with Your Retirement Plans?
Let's
say that you have programs such as stock options or the company is contributing
money into a retirement plan that may be important to you in this arena. What
will happen to all of those programs should you be laid off? Will your
stock options require you exercise within 90 days? Can you keep your
company stock purchase plan? How much of your 401(k) is vested?
Should you keep your 401(k) plan at work or move it to an IRA? Should you
consider NUA-Net Unrealized Appreciation if you have company stock in your
401(k)? What will happen with your company deferred compensation plan if you
are an executive? In many cases, you may not have remembered whether you
chose a lump sum, a five-year payout, or a ten-year payout which could
drastically affect your tax situation for the year.
What Will Your Tax Situation Look Like for the Rest of the Year?
If you don't work for the next 3, 6, or 9 months, what will your tax outlook look like for the rest of 2020.Should you be converting IRA money into Roth IRA money?Do you have capital gains that could be taxed at a lower tax bracket?Did you have to cash out on stock options or vested in Restricted Stock Units that could cause you to move to a higher tax bracket?Will you collect unemployment?Did you get funding from the Government beyond unemployment? What can you deduct from your home expenses this year? It's really important to proactively get a tax plan in place so you aren't surprised when you file for 2020 in 2021.
Do You Get Job Hunting Support?
You should always be working on having a fresh
resume, even if you aren't thinking about leaving your employer. You never know
what's going to happen at your job and having a fresh resume might help you get
started quicker with your job search. Your employer may offer resume
writing or job outplacement services, which will be free to you.You might also want to consider what sectors
will need workers and perhaps take a course or two to prepare yourself in case
you need to find a new job quickly.The
more skills and competencies you have, the easier it will be to get a job.
Make
sure you take advantage of whatever free money, stimulus, or loans that may
come from the Government over the next year.You've got to research every opportunity to put dollars in your pocket
to provide for your family.
Remember,
try not to get prior management upset. In the game of business, it's always
going to be a nine-inning game versus a one-inning game. You never know
how a former colleague or boss can help you or hurt you. You want to make sure
that you don't upset former employers because the merry go round will come
around again at some point in your future. So just make sure that you
leave on positive terms.Many of these
layoffs in 2020 will happen to no real fault of your employer, but the
circumstances created from the coronavirus worldwide.
Try these six money moves from oXYGen Financial when you get a pink slip from work. We have been helping thousands of clients all over the United States to build a solid financial plan and make sound money decisions during these difficult times.
If you would like to receive more information on making smart money moves for your future, be sure to contact us today!
