Our office is located in Chandler, AZ. Chandler is home to numerous Technology companies such as Intel, NXP, and Microchip. Recently several of these companies have gone through company-wide reductions in their workforce.
It can be a shocking situation. After 20 years you are out of a job and you just received a package from your former employer with an amount of paid time for years worked and some sort of medical coverage. It’s at this point that you can do 1 of 2 things. Wing it, or have a plan. I suggest having a plan. I also suggest avoiding these 5 mistakes that I have seen over the years:
- Not estimating what your tax liability is going to be. If you were fortunate enough to receive a severance package make sure that you had the correct amount of taxes withheld, otherwise you could be in trouble come tax time.
- Not accounting for a 401k loan that was never paid back. If you had a loan on your 401k and default on the payback the remaining amount of the loan will be considered a distribution for tax purposes.
- Not proactively looking for a new position. If you can’t retire (might I suggest meeting with someone to review your retirement income plan to see if you can retire) you # 1 priority is to find new employment. I have had several clients that took 9 months off on a 12-month severance only to find out that they couldn’t find a job.
- Not adjusting to the market. Unfortunately, I have seen this several times. When some jobs are eliminated they don’t come back. Sometimes you have to reinvent yourself and change careers to still meet your retirement goals. Find something that makes you happy that you can believe in.
- Not changing your lifestyle. Going out to eat 5 days a week and taking multiple week-long tropical vacations is ok if you have the income and the budget to support it. If your income changes your spending habits need to change.
I have always been a glass is half full type of guy and I believe that change presents an opportunity to do something that you enjoy or even make more money.
No matter what, you need to have a plan of action. Don’t let this change in your professional life ruin a lifetime of saving.
Kevin Foster, CFP ®
Comprehensive Wealth Manager | Tax Advisor
Chandler, AZ 85226