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📆This Week’s Topic

This week, we’ll be talking about ways to protect and manage your money if you’re making the transition into retirement, if you already have, or are jobless. Also, Layoffs have increased this year, and we’ll be providing insight on how to manage your finances if you find yourself unemployed.

💳 Cause & Effect

Around 1.2 million workers in both the public and private sectors have been laid off this year. As of around June, the number was already higher than 2024, and since then its risen. A large part of those workers laid off were people far into their career, maybe close to retirement age, but financially unable to do so. When you reach the age of fifty, it becomes harder to find work, especially now due to the tightness of the job market. However social security has always been helpful for older workers, because they would receive some income from that in addition to a job they might have, or the social security would support them if they didn't have a job.

📊 Statistics

In August, roughly 22,000 jobs were added by employers in the US according to the Bureau of Labor Statistics. That figure is substantially lower than what experts predicted, which was 75,000. Due to the large cuts in both the government and private sector and the small addition to jobs, the unemployment rate jumped up from 4.1% to 4.3%. With more people being unemployed, social security would become crucial for elderly workers who’d been cut. However, the social security trust fund is speculated to reach depletion in 2033, and President Trump has made cuts within the program, firing 7,000 workers.

🔚 Outcome

If you’re laid off closer to your point of retirement, then your saving priorities shift from retirement to paying the current bills while you look to find employment. “Your first step should be figuring how to use the money you have as a bridge to pay living expenses while you look for a job,” says Christopher Stroup, president of Silicon Beach Financial.

⛱ Consumer Effect

One of the first ways experts provide is to treat severance packages, or any funds you might receive from your laying off as a valuable asset, not as a windfall. Severance packages are typically one week’s pays multiplied by the number of years you’ve worked there, so the sum really depends. Their advice is to not spend it all at once, but to save it, and use it as necessary. Josh Andrews, Advice Director at USAA says it’s wise to not use that for vacationing or large purchases, but to cover your expenses during your unemployment. They say its wise to receive severance over a period of time, rather than a lump sum, because it reduces the temptation to spend.

Don't withdraw your 401k. According to a recent Vanguard report, 1/3 of all laid-off employees immediately withdraw their 401k as a cash sum regardless of the ensuring withdrawal penalties. Mr. Andrews says it’s smart to withdraw taxable investments before dipping into your retirement fund, even though you could lose gains on those stocks. However, if you’re past the age of 59½, you won’t be penalized for withdrawals.

⛱Consumer Effect (continued)

Knowing your tax bracket is important if you get laid off. Your income drops when you’re unemployed, and selling taxable assets can let you pay lesser taxes. Stocks and bonds held for over a year are subject to capital gains taxes, and the taxes on those depend on your tax brackets. Basically, having a higher income means you pay greater taxes on those holdings.

And finally, don't sleep on unemployment benefits or Affordable Care Act health insurance plans. If the previous plan you had is continued under COBRA, experts suggest backing that against an ACA individual plan, as the cost might be lesser with an ACA plan. And for state unemployment benefits, it’s suggested to apply for them in the state in which you were employed, not the state where you live. However, it’s important to know how long the benefits last, and what could put them in danger.

⏳ Final Summary

We hope that this can be helpful for you or someone you know, if they’re laid off or unemployed. Hopefully, these tips can help you stay in a stable financial position while you find employment.

🙏Thank You & Important Information

As always, thank you so much for reading this week’s edition of Friday Finance. We hope you enjoyed this week’s topic, and hope you’ll enjoy future iterations. Have a great weekend, and see you next time.

Grayson Stein and Jacob Gans

Friday Finance