With unemployment statistics hovering at 10% across the nation (United States Department of Labor, November 2009), declines in real estate values and uncertainty in the stock market, those who have been downsized and laid off are especially vulnerable. Stephanie Sherman, CFP®, Partner, Family Wealth Management Group, LLC, in East Hanover, NJ, offers these tips to help the unemployed protect their assets and their financial future.
Evaluate your financial health. Prepare an updated list of your income, expenses, assets and liabilities. When circumstances change due to job loss or financial hardship, many of us don't change our spending habits until savings have been depleted. If you've planned ahead and have the suggested six to eight months of emergency cash stashed away, now is good time to really pinch pennies to make sure that money is there when you need it.
Review your health insurance options. Upon termination of employment, some workers and their families (who might otherwise lose their health benefits) have the right to choose to continue group health benefits provided by their group health plan for limited periods of time under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Health Insurance Portability and Accountability Act (HIPAA). (For more information, visit http://www.dol.gov).
Investigate unemployment benefits. Workers who are unemployed through no fault of their own (as determined under state law), and meet other eligibility requirements, may be eligible to receive unemployment benefits. Unemployment insurance payments (benefits) are intended to provide temporary financial assistance to unemployed workers who meet the requirements of state law. Under the Federal-State Unemployment Insurance Program, each state administers a separate unemployment insurance program within guidelines established by federal law. (For more information, visit http://www.dol.gov)
Plan for retirement. Review your pension plan, 401 (k), IRAs, Social Security benefits and other savings plans to assess whether they best meet your long-term retirement goals.
Protect your assets. Review your life and disability insurance coverage, especially if you are the primary breadwinner. Are they portable (i.e. can you continue the coverage at your present group rate)? Ask your financial advisor whether long-term care insurance is right for you.
Analyze your spending habits. Many people don't realize how much they spend on weekly trips to the market, afternoon lattes or dry cleaning. Try to eliminate a portion of these expenses, and be honest about what you really can live without. Brewing your favorite cup o' joe at home may not be as fun as a frothy latte from the corner café, but shaving four dollars a day from your food budget adds up to $120 a month in savings.
Call your creditors before you fall behind. Many people avoid calling their lenders and credit card companies until the default notices start piling up. But these days many companies are willing to work with you, even deferring or temporarily lowering payments while you look for employment. Make those calls as soon as you suspect money will become tight and explore all of your options.
Re-define your financial goals. Even if previous plans have taken a detour due to financial hardship or job loss, taking a moment to redefine where you see yourself in five, 10 or 15 years will help stave off discouragement and empower you to look forward. You may not be able to retire when you expected to, or pay outright for a four-year college, but instead of saying "I can't afford it" begin looking for new goals and asking the question: "How can I afford it?"
Meet with a licensed financial professional. Even if you've done this in the past, getting professional advice about investment losses, financial products, insurance coverage and other important issues is essential. Addressing your current situation and making choices based upon your new reality will help rebuild your self-confidence and your bottom line.
For more information about securing your financial future if you've been downsized, register for a complimentary breakfast seminar from 8:00-9:30 am, Friday, February 26 or Friday, March 26 at the Park Avenue Club, 184 Park Avenue, Florham Park, by contacting Victoria Luongo at email@example.com or (973) 386-9699.
Stephanie Sherman, Partner, Family Wealth Management Group, LLC, 383 Ridgedale Avenue, East Hanover, NJ 07936, is a CERTIFIED FINANCIAL PLANNER™ and Investment Advisor Representative of Prudential Financial Planning Services. Contact Stephanie Sherman at (973) 386-9699 or firstname.lastname@example.org.
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