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Even in the midst of a robust economy, layoffs can and do happen, and with the current crisis, many employers have had to change how they work or cut staff altogether. It’s a good idea to anticipate that possibility and be as prepared as possible. Here are a few things you can do to help weather the loss of income and hopefully turn a worst-case scenario into a manageable temporary situation.
Understand Your Benefits
When a layoff happens, especially one that is a complete surprise, it can be emotional, traumatic, and confusing. While you are absorbing the news, your employer likely will provide information verbally and in writing, covering any benefits for which you are eligible. It may feel overwhelming, but take the time to review it carefully. Be sure you understand how much severance pay you will receive and for how long, and the company’s offer for continuation of benefits. Knowing how much you can expect in severance benefits and pay will help you determine how much additional income you’ll need until you’re rehired. You can check the Texas Workforce Commission to determine eligibility for unemployment benefits.
Gather Critical Documents
If your employer allows you to gather work samples for your portfolio or resume, request access. Ask HR for copies of your performance reviews. They contain invaluable details on your work achievements — accomplishments that you will want to tout on your resume and in interviews. Print out or save to a flash drive copies of work you created. If you’ve saved letters of commendation or praise, pack them up along with any personal items from your desk space. If you have ample notice, make sure your files are purged of any personal notes or information.
Evaluate Insurance Options
Employers with 20 or more employees in their health plan are required to offer continuation of health coverage for a limited period through COBRA. But if you are accustomed to the employer paying a portion of your premium, be prepared to pick up the entire tab — up to 102 percent of the cost of the plan.
You may be able to find better options through healthcare.gov or by turning to an insurance expert, and, if you have a health savings account, you can use it to pay premiums while you are unemployed.
Likewise, if your employer pays for life or disability insurance coverage, you may be able to continue those policies on your own. Ask HR for insurance company contacts to discuss your options. Then compare those with other insurance carriers to determine the best fit for your needs.
Don’t Overlook Your 401(k)*
Now is the time to make decisions about your retirement savings as well. A Rollover IRA allows you to transfer funds from your company-sponsored 401(k) to another tax-advantaged savings account with no taxes or penalties for early withdrawal. A CFS* financial advisor at UFCU can help guide you in the rollover process.
Maximize Employee Benefits While You Can
If you anticipate an impending layoff, or have been given notice of a layoff date, make sure you maximize every employee benefit possible while still employed. Have you used your full allotment of medical appointments? Even in the current climate, some medical professionals are scheduling tele-health appointments. You might be able to stock up on contacts or glasses as well. Schedule continuing education classes online or renew professional certifications now if your employer pays for those.
Your severance package may include benefits to help your job search — like professional resume assistance or job placement services. You may think you don’t need them, but why not take advantage of free services while they are offered? You may be surprised how much they can help position you for what’s next.
Build Up Emergency Savings
According to Money magazine, the average job search takes just over six weeks. You want to be sure you have ample savings to carry you through your unemployment. A standard rule of thumb is to have an emergency fund to cover at least three to six months of living expenses. A dedicated savings or money market account is a good way to ensure that those funds aren’t tapped for other things, and not there in the event of an actual emergency.
Update Your Profile and Resume
It’s a great time to reach out to old contacts, update your resume, and clean up your professional profile on LinkedIn or other social and professional platforms. Maximizing opportunities to stay in touch with colleagues and potential employers is a great way to minimize the time you spend out of work.
* Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. UFCU has contracted with CFS to make non-deposit investment products and services available to credit union members.
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