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Are you one of the millions who has lost their job during the COVID pandemic? More than 36 million Americans have filed for unemployment since the beginning of March. That, by far, is the largest surge in unemployment in the country’s history.1 The more than 20 million lost jobs in April were the single-largest monthly total since the country began tracking the statistic in 1939.2
Losing a job is always difficult, but it may be even more trying during this time. There’s so much uncertainty in the world right now. Many companies don’t know what the future holds or how their business may be impacted. The financial fallout from the pandemic could last for an extended period of time, making it difficult to restart your career or find a new position.
The good news is there are steps you can take to regain control of the situation. Below are a few tips to consider:
Take control of your old 401(k).
Your 401(k) at your former employer may be one of your biggest retirement assets. After you leave your employer you have a few options on what to do with it. First, you can cash it out and take a distribution. However, as mentioned above, that may not be the wisest course of action.
Another option is to roll your 401(k) into an individual retirement account (IRA). Very often, an IRA will offer a larger selection of investment options than a 401(k) plan, so you can implement the right strategy for your needs. You can also transfer outside IRAs to one location to consolidate your savings. That could help you develop a cohesive strategy across all your investments.
My team and I are happy to help you with this process. We assist individuals just like you who are in the middle of a career transition but want to take control of their financial future.
Assess your situation.
Resist the urge to panic. This is a good time to take a deep breath and assess your situation. Anxiety and fear often come from uncertainty. However, if you can gain some insight into your situation and your financial stability, you may find that things aren’t as bad as they seem.
Start by making a list of your expenses. Look for opportunities to cut spending on non-essential items. Also, consider contacting your lenders to see if you can get a deferral or temporary forbearance on payments. Many mortgage lenders are allowing borrowers to suspend payments for a few months if they have been impacted by COVID. A pause on large bills could give you some breathing room.
Try to drill down an estimated amount you need to live each month. Once you have that number, you can start exploring ways to bridge the gap.
Explore all options before raiding your retirement.
You may be tempted to withdraw your retirement savings. The IRS has made it easier than ever to do so, especially if you’re under age 59 ½. As part of the recent CARES Act, you can now withdraw up to $100,000 of 401(k) and IRA funds without paying the 10% early distribution penalty if you have been impacted by COVID.6
There are some reasons why you should think twice before doing this. One is that you still have to pay income taxes on the distribution. It may be penalty-free, but it’s not tax-free. Also, you will lose your ability to grow that money in the future, which could limit that amount you accumulate for retirement. You’re essentially taking money from your future self to cover today’s expenses.
Start your unemployment claim ASAP.
Assuming you’re eligible, your state’s unemployment office should be one of your first phone calls. It’s important to file as soon as you possibly can. Many unemployment offices are overwhelmed by the volume of applicants, so they’re not processing claims quickly. In fact, one study found that 44% of applicants still haven’t received their benefits.3
If possible, consider filing online. If that’s not an option, be prepared to wait on the phone to file your claim. Many states have expanded their hours, so think about calling at a time that may not be popular, like first thing in the morning or on the weekend to get faster service. In Ohio, for example, residents have found that the wait time on the weekend is less than half of the wait time on weekdays.4
Strengthen and expand your network.
A strong network is always an asset when you’re looking for a job. Use this time to reconnect with old friends and colleagues. You may find that many of them are in the same position. Or you may discover your next position. Social media platforms like LinkedIn and even Facebook make it easy to send a quick message and reconnect.
Consider a temporary or part-time job.
At this point in your career, you probably don’t want to take an hourly job. However, that may be the best option to maintain yourself financially. There are businesses that are hiring right now. It may not be the type of work that you prefer, but it could help you cover your expenses until you find the type of job better fits your skill set. You could also look into flexible gigs, like delivery services or driving for a ride sharing service.
Of course, be sure to check out part-time work may affect your unemployment. If the work would limit your ability to collect benefits, you may want to reconsider.
Take care of your mental health.
Mental health is always an important issue, but it may be worsened by this pandemic. In a recent study, 40% of Americans said the coronavirus pandemic had negatively impacted their mental health.5
Focus on your health and wellbeing so you can come through this stronger than ever. You may want to find something to provide some direction and purpose in your day. Perhaps pick up a hobby or volunteer. You could further your skills by taking a course online. Keep moving forward so you’re ready to jump in with both feet when your next opportunity presents itself.
We know this is a difficult time. We’re here to help you explore all your options and make the best decision for your needs. Let’s connect today and start the conversation. Contact us at Bales Financial Group. You can schedule a virtual or in-person meeting here.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20131 - 2020/6/3
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