The current economic reality is somewhat dire and the projections can seem scary. A lot of people have been and will be laid off due to coronavirus. Should this mean an early retirement for you?
For most, being out of work right now is probably just a temporary situation. However, you may be using this time to reassess your employment and even think about retirement.
Here are 9 tips for navigating this uncertain time to help you get through the short term and plan for the long term:
1. File for Unemployment Immediately (Even if You Worked for Yourself!)
We are in unprecedented times. Unbelievable numbers of Americans — 10 million as of April 1 — are losing their jobs.
You can file if you lost a full time job. Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act expands unemployment benefits eligibility to:
- Part-time employees
- Freelancers
- Independent contractors
- Gig workers
- People who are self-employed
- Individuals who were set to start a new job, if your job closed due to the coronavirus
- Employees who have been furloughed.
The CARES Act also provides:
- A $600 per week federal payout on top of state benefits through July 31
- Extends state unemployment insurance by an additional 13 weeks
- Incentivizes states to do away with waiting periods
- Waives some work history requirements that would normally make you ineligible.
You must apply for benefits with your state government’s system. Find your state’s unemployment program with this unemployment benefits finder.
NOTE: Be prepared for systems to be overwhelmed. It may be a frustrating experience to try to file, but worth it. Keep trying.
2. Make a Plan for Your Health Insurance
It probably does not need to be stated, but you need health insurance. Even if you don’t get coronavirus or coronavirus costs end up being covered by the government, there is still a lot that could go wrong. You need health insurance.
There are different rules that apply when it comes to maintaining health coverage after you have lost a job. No matter the particulars of your situation, it is best to consult with your human resources office about your case. Check and double check.
Here are the general guidelines for different situations:
Furloughed: Typically, if you are furloughed, your employer will keep up with your health benefits while you are not working, though you will likely need to keep up with your contribution (including out of pocket costs), if applicable.
Laid Off: Employees who have been terminated will need to pay for health insurance themselves. You have some options:
- COBRA: A federal program known as COBRA allows you to keep your employer health plan for up to three years. However, you will likely need to fund the cost of this insurance entirely out of your own pocket. However, COBRA plans can be expensive and if your employer has gone out of business, then the plan will no longer be available. You may be better off and save money by buying insurance through the Affordable Care Act.
- Affordable Care Act: With your drop in income, you will likely be able to qualify for a plan with a relatively low premium. You might even be eligible for Medicaid. However, the ease of enrolling will depend largely on where you live.
Eleven states and the District of Columbia (most of the states that control their own ACA marketplaces) are opening the enrollment period to people who have lost their jobs. However, there are deadlines for enrolling. If you live in one of the following states, use these links to learn about your coverage and costs:
For everyone else, President Trump opted not to relax enrollment rules for the states with markets run by Healthcare.gov. Under current law, people who lose job-based insurance already qualify to enroll for health insurance on the marketplaces but are required to provide proof that they lost their coverage. A special enrollment period would have made it easier for such people to enroll because it would not require that paperwork. It also would have provided a new option for people who chose not to buy health insurance this year but want it now.
Other Ideas: Depending on your situation, there may be other viable options. Explore 9 ways to cover your health costs for an early retirement.
3. Create a Short and Mid Term Financial Plan
Besides filing for unemployment and thinking through health insurance and what that is going to cost, the other immediate thing you should do is to assess your overall short and mid term financial plan.
Assess the new reality of your income and how that squares with your necessary expenses.
You can find many ideas for emergency money and how to assess the best sources of emergency funding in this article: The Best (and Worst) Sources of Emergency Money and Income During the Coronavirus Crisis.
4. Take Time to Process the Loss. Breathe!
You may be feeling anxiety, panic, sadness, anger and other strong emotions.
These are normal. Do whatever you can to acknowledge and process these feelings. And, take your time. There is no need to rush into long term problem solving right now.
Be sure to participate in activities that make you feel good — exercise, sleep and talking with friends can be accomplished even given social distancing and shelter in place directives.
5. Think Carefully About What You Want to Happen When This Crisis is Over. Will Retirement Come Sooner than You Expected?
If you have been furloughed or your employer has halted operations, you will likely be able to return to work when this crisis passes. Even if you were laid off, your employer may need or want you back in a few months. Think carefully about whether you want to return or not.
And, if you have been permanently laid off, what do you really want to happen for your future?
Apart from the financial considerations, you may want to use this opportunity to assess your life choices. Being out of work might open up interesting opportunities for you.
Consider the following questions and resources:
6. Figure Out Where You Stand Financially for Retirement and the Long Term
There is what you want to happen with your future, and there is what can responsibly happen.
There is at least one thing that is A LOT scarier than figuring out your long term finances and that is NOT figuring out your long term finances. Don’t let worries about retirement and your future financial well being stress you out and create low grade drag on your well being!
First and foremost, you will want to assess whether you need to work for retirement security. You may find that you can tweak your plans and make almost any work scenario possible.
Mix your financial reality with your personal goals and discover your path to the future you really want!
A few popular retirement plan adjustments include:
- Retiring later, going part-time at some point or otherwise earn income for a longer period of time. Play with different levels of work income to see what really works for you.
- Exploring and adding passive income streams
- Downsizing or retiring abroad, somewhere less expensive. Housing is usually your most valuable asset as well as biggest cost and there is a lot you can do to improve your budget by switching up your housing plans.
- Delaying the start of Social Security to boost your monthly benefit for better lifetime wealth
- Reducing your expenses
- Carefully exploring optimistic and pessimistic scenarios for your plan. Look at general inflation, medical cost inflation and rates of return on your investment accounts and make sure you are solvent for a variety of possibilities.
Log in to the NewRetirement Planner to easily try any of these opportunities to see if it improves your financial future.
Or review “How to Retire Like an Adult: A 10 Point Checklist.”
7. SPECIAL NOTE: Do NOT Rush to Start Social Security Retirement Benefits
If you have been laid off and are 62 years or older, you may feel the pull of retirement and starting Social Security benefits. This is not the best idea.
Social Security is a lifelong payment stream. Your can greatly enhance your financial security by delaying the start and maximizing your monthly benefit as much as possible.
The best way to assess whether or not starting Social Security early is to run a variety of scenarios using the NewRetirement Planner or a spreadsheet. You will want to compare:
- Your and your spouse’s Social Security start date and benefit amount and your goal age(s) (How long you want to fund retirement.) (NOTE: The longer you live, the more valuable waiting to start benefits will be because you (and your spouse) are collecting a higher paycheck for a longer amount of time.)
- The costs associated with any alternative source of funding (like selling assets now when markets are down).
8. Set Long Term Goals and Take Specific Actions Now for What You Would Like to Happen
Once you understand both what you would like to happen and what is financially feasible to happen after this crisis passes, you can start to formulate plans for making it all a reality.
Write it all down and make lists for what you need to do or learn. Ideas to consider:
- Boosting skills
- Networking
- Writing a Business Plan
- Updating resumes or online profiles
- Trying out different hobbies
- Exploring volunteer opportunities
- Researching whatever it is that comes next for you
9. Find Short Term Purpose and Be Kind to Yourself
It is one thing to be practicing social distancing. It is another thing to be doing it without a job or any purpose.
Being confined largely to your home can be challenging. Without work, you will be better off giving yourself some semblance of a schedule and some kind of reason to get dressed each day.
You don’t need to save the world. Your goals can be as simple as finishing some Netflix series. Just be mindful of what you are doing and why.
Courtney Beals, a marriage and family therapist in California wrote about the importance of being kind to yourself. She wrote, “reinforce the positive, not the negative. If you think you’ve been horrible 98% of the day, acknowledge the 2% you thought you weren’t.”
By focusing on what you do right, you will actually end up doing more of that.
