Prevent Unexpected Job Loss from Derailing Your Retirement Plans

Prevent Unexpected Job Loss from Derailing Your Retirement Plans

For those near the finish line of their career, the last few years before retirement might seem like more of a formality, a way to keep health insurance, a steady income and enhance the last minute retirement contributions missed in earlier, leaner years. This time is often when the details of retirement plans get finalized.

On the other hand, the initial career years and the following few decades of working offer a path to creating a comfortable lifestyle and setting up the opportunity for financial security in the future. An unexpected job loss at any stage of your career can be unsettling – personally, professionally and financially. Creating a contingency plan can help you address many of the aspects of moving forward while minimizing financial impact.

First, consider taking the time to address feelings of anger, sadness, disappointment or even relief you may be experiencing, so you can avoid making decisions based on emotion. There are also many important financial and lifestyle questions that will arise, and it is important to carefully evaluate how to handle them.

For example if you received severance, how long will that last? What is the process for filing unemployment and does the separation qualify? There is also the need to handle any employer sponsored retirement plans that may be affected. Should you consider taking Social Security benefits and if so, what are the long term implications of filing now? What options do you have before raiding your retirement accounts to cover expenses? Should travel or purchase plans be postponed and for how long?

If you or a loved one have not created a contingency plan for an unexpected job loss, contact your financial advisors office today to discuss how to minimize the effect on your long-term financial goals. A financial advisor can offer a comprehensive evaluation of your finances; providing you with the information to help make well-informed decisions on the next steps.

FINANCIAL FACTS

Bad Decision – Eighty percent of 1,349 individuals surveyed in November 2013 indicated that the worst decision they had made in their lifetime dealt with their personal finances, ahead of poor choices made with regard to marriages, health or job selection (source: National Foundation for Credit Counseling, BTN Research). 

Unexpected – Forty-seven percent of retirees left the work force sooner than they expected, oftentimes the result of health issues, disabilities or corporate downsizing. Only 7 percent of those individuals who retired earlier than they anticipated did so for positive reasons, e.g., their retirement accumulation was larger than expected (source: Employee Benefit Research Institute, BTN Research). 

The Highest Ever – When all 500 companies report their fourth quarter 2013 earnings, it is anticipated that full year 2013 earnings for the corporations that make up the S&P 500 will total $99.42 per share, an all-time inflation-adjusted year-end record. Earnings results used are defined as “income from continuing operations” (source: S&P, BTN Research).