How to Prepare Your Financial Plan for a Layoff
How to Prepare Your Financial Plan for a Layoff: Preparing a financial plan for a potential layoff can help you feel more secure and financially stable during uncertain times, according to Beau Kemp of Sensible Money.
Key Takeaways
- Build an emergency fund of 12 months of expenses (not just 3-6 months) if you work in an industry prone to layoffs or income reduction, to provide a buffer without forcing portfolio withdrawals
- If nearing retirement (5-10 years out), stress-test your retirement plan by calculating how long you'd need to work if your income dropped to 50% or 75% of current levels—this removes shock if layoff occurs
- For those age 55-59.5, you can withdraw from employer retirement accounts penalty-free; at age 59.5+, IRA withdrawals are penalty-free—so account location matters when building emergency savings
- Plan 7-10 years of near-term retirement expenses using bond ladders with money markets and CDs earning 5% on short-term bonds, keeping these conservative investments away from stock market volatility
- Don't make emotional portfolio decisions based on market swings; having a written financial plan in place makes it easier to adjust to life changes like layoffs without panic-driven mistakes
How to Prepare Your Financial Plan for a Layoff: Will layoffs affect your retirement plan? Preparing a financial plan for a potential layoff can help you feel more secure and financially stable during uncertain times, according to Beau Kemp of Sensible Money. For more free finStream videos featuring Beau Kemp, please visit this page: https://www.finstream.tv/featured/beau-kemp/
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