Financial fixes: How to survive job loss

4 MIN READ | #blog

In the first few years after college, graduates tend to expect job turbulence. After all, the professional learning curve is steep, and it can take a while to find a good job fit. The surprising news, however, is that job certainty remains elusive as people age. In fact, among jobs started between the ages of 35–44 years old, over one-third (36 percent) end in less than a year.1 Further, more experience doesn’t guarantee work — older workers average at least one involuntary job loss after the age of 50.2

Losing your job — whether it’s from downsizing, illness, or injury — can be painful. But it’s also a common part of modern work life. These steps can help you protect your income in the event of sudden change, as well as manage life as a newly-unemployed person.

Protection first

As the stats show, job loss happens to a lot of people. We tend to think, “it won’t happen to me,” but a better strategy is to protect yourself before the worst happens. Did you know one in four workers in their 20s today will have to stop working, at least temporarily, due to a health condition? To guard against a drop in income, you can protect a portion of your income with disability insurance. This type of policy helps provide income during recovery from an illness or injury. As a result, a physical setback doesn’t have to drain your savings or run up your credit card.

Make your own backup plan

Speaking of savings, another way to protect yourself is to build your rainy day fund. Rather than fear job loss, save for the possibility of it. Experts recommend saving up to 20% of your income.3 Then when the rain (and income) falls, your savings will help you weather the storm.

Leave no stone unturned

If you are laid off or downsized from your job, you may be eligible to collect unemployment benefits. Also, if you received health insurance through your employer, you may receive an insurance extension as part of a severance package. Upon termination, confirm the status of your health plan with your former employer. If your coverage ends with the job or soon after, get in touch with a local healthcare navigator about buying insurance through COBRA or the marketplace.

Update your budget

When a job ends, it rattles a person’s financial confidence. It’s crucial to avoid the impulse to panic. Instead, get real with the numbers: what do you have in savings? What expenses can you postpone? Remember: it takes an average of six weeks to land a new position. For more experienced roles, like vice president or director titles, it takes nearly twice as long — 76 days.4 Revise your personal budget, accounting for the reduced income, for at least three months. Your financial representative can be a big help in this process.

Get a gig

You can also stave off panic by working a gig (or gigs). The gig economy may not be a long-term solution, but it does offer all sorts of opportunities to generate income. Best yet, you can structure these jobs, like driving for a car-sharing service or being a personal assistant for-hire, to your schedule. This allows you to earn while still having time to look for your next career move.

Refresh your resume

It won’t feel easy at first but take the time to review your recent job objectively. What aspects of it do you want to recreate in a new role? What new skills and experience did you gain? Let your answers to these questions guide you in updating your resume. (Before sending out your resume, review your social media accounts with an objective eye, too.)

Bring on the cheerleaders

Job loss is one of the top five most stressful things that can happen in a person’s life.5 But it does happen to a lot of people. Brush off the urge to isolate and get into the world. Now is the time to create a new routine with activities like volunteering, exercise and networking. Most importantly, surround yourself with people to encourage you on the journey. Only personal cheerleaders need apply.

Plan now for the unexpected

The truth is no one is immune to the threat of job loss. Yet, too often, people get caught by surprise when work suddenly ends. The key to surviving job loss is to get real about its possibility. Make your plan now to prepare for the unexpected. A financial professional can help you get the right tools in place. Then, even in the event of job loss, you’ll be better able to turn it into an opportunity to grow — personally and professionally.

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1 News Release, Bureau of Labor Statistics, U.S. Department of Labor, August 2019

2 This job challenge should scare older workers, CNBC, January 2019

3 Personal Savings Statistics, Guardian Life

4 Here’s How Long It Really Takes to Get a Job, Money, October 2015

5 The Top 5 Most Stressful Life Events and How to Handle Them, University Hospitals, 2015