Assets and Taxes - Job Loss Tips You Wish You Knew Sooner...

Episode Date: April 11, 2025

If you've recently lost your job or know someone who has, this video is a must-watch. We break down the key financial tips most people don’t hear until it’s too late. This includes what to do with your 401(k) or retirement plan, how to stay afloat while searching for your next opportunity, options for health insurance, severance, and unemployment, simple strategies to avoid costly mistakes, and how to regain financial control and build a better foundation.(0:00) Intro(1:25) What's Are Some Immediate Things You Should Do(4:35) What Does Unemployment Look Like?(6:15) What Are Other Ways To Make Money While Unemployed(7:20) What Happens With Your Retirement Account(9:35) What Does This Mean For Your Thrift Savings Plan (For Government Employees)(11:00) How To Make Sure You Have An Emergency Fund(13:30) What Are Some Big Picture Things To Think About(15:45) How To Stay Positive Through This(17:35) Final Action Steps(19:00) ConclusionWe know that this is a really hard time for you.Luckily, we have some free resources for you to help you get started!Our Financial Wellness Tool: https://assetstrategy.com/myblocks/ Once you're ready, we can offer you some professional guidanceBook a FREE discovery call today to explore how we can help you: https://assetstrategy.com/contact/Free Financial Guides: https://assetstrategy.com/financial-guides/Call the Asset Strategy Team: 781-235-4426Connect:Website: https://assetstrategy.com/LinkedIn: https://www.linkedin.com/company/asset-strategy-advisorsFacebook: https://www.facebook.com/people/Asset-Strategy-Advisors/61573136047425/Instagram: https://www.instagram.com/asset_strategy/

So here's the deal. Doge has been laying off a massive number of federal workers lately, and it's left a lot of folks talking, panicking, wondering what to do next. No one expects to get laid off, right? Two-thirds of all jobs in the U.S. are with small companies,

so layoffs can come from anywhere. So whether you're a large employer, a small employer, government employee, a layoff is a layoff is a layoff. And the most important thing to think about is don't sell your 401k without thinking about. Hello everyone, welcome back to another episode

of Assets and Taxes. I'm Bart Wilson, I run operations here at Asset Strategy and I'm joined by my colleague and friend Tim Black, our Director of Retirement. So here's the deal. Doge has been laying off a massive number of federal workers lately and it's left a lot of folks talking, panicking, wondering what to do next, especially from a financial perspective. Job loss is something that is a risk we all could face, company corporate layoffs or something

happens that you don't foresee. So we think it's an important time to highlight this and let's not waste any time, get right into it. So, Tim, if you're laid off, what do you think is the, the immediate checklist that you need to go through? Yeah. So, no one expects to get laid off, right? It sort of sneaks up on you. And it's not just Doge. It's not just large company headline layoffs. When you think about it, you know, two thirds of all jobs in the U S are with small companies. So layoffs can come from anywhere about it, you know, two thirds of all jobs

in the US are with small companies. So layoffs can come from anywhere. So whether you're a large employer, small employer, government employee, a layoff is a layoff is a layoff. And the most important thing to think about is, what am I going to do next? So how am I going to make sure I can pay the bills? How am I going to make sure that I've got adequate income to cover what I need to cover until I can pay the bills? How am I going to make sure that I've got adequate income to cover what I need to cover until I get my next job? So first things first, you're going to get that final paycheck from your employer when you're laid off.

Is it for the time that you've worked? Is there a severance package? But make sure you understand when you get that last paycheck, did you get all of your paid time off for vacation that you had accrued, did you get any residual bonuses that were out there, but any other cash compensation that was due to you, make sure that it's included in that final paycheck before you walk out the door. Don't leave any cash on the table. And then most of the folks who we talked to who get unemployed get laid off, one of the

biggest concerns they have is what happens with my health care coverage. So health care, there really is two things to think about. Health care premiums when they're paid by you and your employer and usually you're paying a piece of it, but premiums cover a full month of coverage. So if you're laid off early or mid-month, you're covered through the end of that monthly period. So you still have coverage for a very short period of time but after that time wraps up you've got to think about can I continue my health care coverage offer that was offered through my employer if you had it and you can through a program called Cobra and what Cobra does Cobra says you can continue as though you were covered by your employers plan because you still are.

But instead of your employer picking up a piece of those monthly premiums, you pay the entire amount yourself. Which can be pretty expensive and it's not just the entire amount, but there's usually a three or four or five percent administrative fee on top of that. So Cobra premiums will be far more expensive than the healthcare premiums you were paying as a portion of your paycheck each period. It's good to know. Yeah so it's it's not inexpensive. Healthcare is expensive for a lot of employees. It's subsidized by the employer. Not a hundred percent but a big chunk. So Cobra is a very good solution but it's a very expensive solution.

So if you can't do Cobra, one of the things you can do is you can go out to your state that you reside in and a lot of times the state has its own insurance solution for you and a lot of times that can be substantially lower cost than using Cobra. Yeah I think it's really important to consider you know your cash flow and come in and expenses out when you're gonna let off. Healthcare is a big part of that but talking about income in what is unemployment gonna look like? Yeah so first and foremost you forget that while you were employed a small withholding

every pay period was to your state unemployment insurance solution. And so if you're unemployed, now is a chance for you to get paid back for some of the money that you paid in. So state unemployment benefits are available to you. Our advice typically is file for those as soon as you possibly can. The sooner you file, the sooner you get compensated. When you're unemployed, cash flow in is incredibly important. So let's make sure we don't delay the state unemployment benefits. We talked about the health care. So between health care and

unemployment benefits, your immediate short-term needs at least are being covered. Most unemployed folks will then think about well unemployment may not cover all of my expenses so now what do I do next? So we talk an awful lot about all right so how can you manage some of your expenses and we think that there's really two kinds of expenses there's the fixed expense you know I got to pay my rent I got to pay my mortgage I got to pay my kids school you know call my car payment, but there's ways to negotiate around these. You can actually reach out to your lenders, let them know your situation and look to see if they'd be willing to lower your

interest rate temporarily. Really? Look to see if they can extend, look to see if they'll let you miss a payment or two. They don't like you to, but you can ask and if they know your situation and you're a customer of theirs, there's a very good probability they'll consider your case. I think that's a good tip. I think that's a great tip and could really make a huge impact for a couple months to help you get through. What about, you know, other ways to think about generating income during that time? Yeah, so, you know, we talk a lot about the gig economy.

You know, while you're looking for work, while you're collecting unemployment benefits, you can consider the gig economy. If you have a magic skill set, maybe you're a musician, there's a ways to do things. Maybe you're a magician, there's a way to do things. Go work the birthday party circuit. But some of the things we see a lot,

Uber driving, DoorDash delivery, there's ways to make ends meet. I've got a client who does dog walking. Yeah. You know, but it pays the bills. Yeah. So. You get to hang out with dogs all day.

That's not terrible. I have a friend that was laid off and in the meantime, he picked up Mandy Man work, you know, things like cleaning out drier vent ducts, just like a $20 kit at Home Depot and walk around a neighborhood and could make hundreds of dollars in a day. So I definitely think that you can get creative. But I think that's really great, great advice. So you know, we're talking about income expenses. What about savings?

Help us understand? what happens to your retirement account now that you're no longer there and Can can you access it is that is that a place you can use? Yeah? So it's a great next set of questions after you've hit the primary things you need to think about I've got this retirement account. What do I do with it? Yeah, so first of all there are ways to access money in your 401k or 403b before you hit the magic retirement age or the magic number 59.5 where sometimes withdrawals are allowable without penalty. Okay.

A lot of 401k's have what they call hardship distributions. So if you meet certain requirements and unemployment to pay the bills usually will qualify. You can take money out of your account. It becomes taxable to you if you haven't paid taxes yet. But nonetheless, it's available to you. So if you have no other source of income, you can dip into that. We don't advise that, but it's certainly available. But if you're not looking to take money out of your 401k for emergency usage for short-term cash needs, some of the choices to think

about for your 401k, you can actually leave it in your employers plan. You can't contribute to it anymore, but it can continue to participate in growth in the market. So if the market goes up, your account balance should go up as well. You don't have to leave it there. You can roll it into an IRA. So basically you're taking it out of the employers plan, keeping the tax qualification status and set up your own personal rollover IRA account that the provider of your choice, it could be your local bank, it could be one of the national companies that's out there, obviously ASSA strategy is there to help you with that decision.

But you're not without choices with your 401k balances. And I think that's something that, you know, a lot of people kind of question what's the right choice here. Something that a lot of people don't realize is in your 401k, there's typically, you know, some kind of administration fee that your employer was picking up and you can leave your money in the plan. But most of the time, there is an administration fee. If you're no longer an employee that you pay, you know every month

It comes out of the account. So something to be aware of to definitely, you know, if you have the time to take a look at So You know, we talked about Doge at the beginning a lot of talk about government employees being laid off Help us understand for that audience how this all applies to the Thrift Savings Plan. Yeah, sure. So if you're a government employee, your employer-sponsored retirement plan probably is the Thrift Savings Plan. Sometimes we call it the TSP. So the TSP is an incredibly large pool of money. It's got great negotiating negotiating power and the cost of the investments in the TSP is about as low as you're gonna find

anywhere so it's an incredibly low cost retirement plan solution so if you're not planning on dipping into your account balance there's not a huge incentive to get out of the TSP plan because the expenses are just you can't get a lower cost solution pretty much anywhere out there in the marketplace. However, if you're not managing the money yourself and you need some help with asset allocation, the choices of investments in the TSP plan are somewhat limited.

So if you've got an investment advisor who's helping you out, you can roll your money into an IRA. It may cost a little more from an investment perspective, but most advisors should be able to demonstrate adding value for that cost in exchange for that cost. We talked a little bit about your accounts. We like to coach our clients to having an emergency fund in case of an event like this or some big healthcare expense when we weren't expecting.

Can we talk a little about emergency funds, how to make them last and how to make sure that you're preparing yourself with one? Yeah, so when we talk to our clients, emergency savings is a cornerstone of that discussion. While you're employed, so we're talking about unemployed or being laid off, but while you're employed, the hierarchy of the savings equation is it makes sense to save up to the employer matching contribution level in your 401k plan. So if your employer is matching 50 cents on the dollar for every dollar you put in up to 6% of your

pay, if you're putting 6% of your pay in that's fantastic you're getting the full match. Before you put any more in your 401k after that you should consider moving funds into an emergency savings account, savings account however you want to put it. And you should probably try to have three to six months of your monthly expense needs covered. So if you do get laid off, you're able to pay those bills. And keep in mind, COBRA as a solution can increase your monthly costs when you're no longer employed. So the math equation is a little challenging, but once you set aside three to six months, we think that gives you adequate time to look for that

next job, to get that new paycheck going. To have peace of mind that you know you've got a couple months there set aside. Exactly. You know, I personally have been unemployed and I've been laid off. I've used emergency savings in the past. I've gone past the six months, fortunately. But there are other solutions as well. You can have access to, if you own your own home, a home equity line of credit is a great solution. Tax-free.

I have in place whole life insurance. I took a policy loan against my life insurance policy. And I was able to sit out long enough to find the right job for me instead of any job for me. So there are a lot of different solutions out there. Yeah. And of course, if you're putting an emergency fund in savings, we would highly recommend finding something high yield to make sure that it's been put to work for you

even though it's serving a purpose in cash. So we talked a little bit about retirement accounts. This blip in your career was possibly unexpected and it could, I can see a lot of people that are concerned about derailing their plans for the future. What can you do to protect you know your your vision for retirement or the years ahead? Yeah so maybe we look at this as an opportunity if you're young enough it might be time for you to think about, maybe I take a step

back and I change my career path. I get some vocational training. Blessing in disguise. I get some educational training so I can get a higher earning job in the future. Perfect opportunity for you to consider doing that. Not the right solution for everybody. But investing in your human capital, you as a person, makes a whole heck of a lot of sense. I believe in that wholeheartedly.

So there are a couple of other possible benefits or tax implications that we think it's important for our audience to be aware of. A couple of them are your stock options or your RSUs, what was the vesting schedules, your HSA funds. If you've been putting money aside from a high deductible plan, triple tax exempt, those are still available. And now that you're not getting, uh, healthcare from your employer, that could be a way to, uh, a tax efficient way to, uh, to help cover some of those medical costs. Um, job, uh, ticket expenses, uh, while you're, while you're out there looking, possibly on unemployment, maybe tax deductible. Um,

so we definitely would recommend looking into that. But importantly, if you're going to keep track of all of it anytime, any money that you're spending, travel for interviews, etc. And then like Tim mentioned earlier, reaching out to lenders, negotiating, especially if you're early on in your career and you might still have some substantial student loans, I would highly recommend reaching out to student loans lenders in particular, letting them know and asking them to work with you. Mentally, we talked a lot about financially, mentally, it can cause a lot of panic. Emergency funds are important to have that peace of mind to give you the time to get but you know what would you recommend mentally for for really

staying strong? Yeah so you know you've been laid off from your current job it's it's a blow to your psyche yeah treat the period of your you know your unemployment period that's your next job So your next job is to actually spend time finding your next job. So treat that downtime as though it's a job, you know, don't, uh, don't sleep in, don't slack off. Uh, it's a nine to five kind of thing. You're looking for the job that you're looking for treated like a job. And I think it's not, um, it's important not to ignore, uh, your network as well.

They say it's not what you know, it's who you know. It's important to know what you're doing, but having a network that can put you in front of the right people at the right time, increases the chances that there's an opportunity that's right for you. So while you're investing in yourself and working hard to find that job, also continue to invest in your network, events, reaching out to people individually,

maybe you have a target company that you'd really like to work for, and you're trying to make a positive step in your career in the direction that, you know, you really want it to go. How are you engaging people at that company to build the network and maybe have someone refer you for something that they have open. So it's really important to get creative in how

you network as well. You know, throughout this time here, actually, we have a statistic in front of us here. 85% of jobs are landed through networking. So it's definitely something that shouldn't be understated. So just to cover some final action steps, we talked about taking control of your cashflow immediately. What's the money coming in? What's the money going out? That includes unemployment, severance, any benefits, health care like we discussed.

Where's the money gonna come from? Your emergency fund, maybe your 401k. I'd encourage you to kind of sit down and think about it so you're not caught off guard weeks or months down the road. I would also say, you know, continue to be proactive. Continue to apply, but continue to network. Try investing in yourself and getting a new skill or trying something new. And just continue to move forward, right? The only way out is through a lot of the time. And then we talked also about your retirement accounts, how they could be accessible to

you through a hardship distribution. But we would encourage you not to panic sell, right? Don't sell your 401k without thinking about where we started right now, right? Your cash flow, giving some thought to where the money's going to come from and how much is going to go. Tim, do you have any final advice? I mean, losing a job is tough, but the right plan can really turn it into an opportunity.

Yeah, so losing a job can be difficult, both financially and psychologically. But if you've got the right plan, you can turn this into an opportunity. You can get plenty of free advice. You can come to AssetStrategy.com. We are always here to help you. You can reach out to your inner circle of resources. You can use online tools. There are so many different ways to do this, but all the points you made Bart are directly

right on point. Well thank you for joining us today. If you like this episode please subscribe and share it with someone who needs it. Look forward to seeing you next time on Assets and Taxes.