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Plan Well, Retire Well

Saving and investing your money

Are You Prepared to Separate from Your Employer?

Leaving an employer can bring about a range of emotions from elation to depression. Whether you are leaving your employer voluntarily or involuntarily there are key things you need to be aware of to make your transition as smooth as possible.

1. You may experience an emotional impact. I am currently doing a series on "Getting Through Tough Financial Times" at one of the Illinois Employment Training Center (IETC) offices. I was reminded by one of the participants that when someone leaves the company it feels like a death has occurred. She explained that her co-workers were sort of a surrogate family. She worked with many of them for over 25 years, had witnessed births, deaths, marriages and divorces. Once one or both leave the employer, in many cases, it is as if someone died. Additionally, many people develop their identity around what they do for a living, not who they are; once they are no longer employed, they may feel lost or devalued.

2. You may experience a financial impact. If you are involuntarily separated from your employer and are not old enough to begin collecting retirement benefits, you will likely experience a decrease in income. Even if you voluntarily elect to separate due to early or regular retirement, statistics support the fact that many of you will not be able to afford the same lifestyle as before. Benefits such as health and life insurance may be discontinued because it was connected to your employer.

So, what can be done to make your transition from your current employer easier?

To address the emotional impact of leaving an employer, Giesela Grumbach, Family Life Educator with the University of Illinois Extension recommends:

1. Get in touch with your feelings. Feelings such as shock, disbelief, disappointment and even anger are not uncommon.

2. Manage anger and control stress. For tips on how to control stress, visit Getting Through Tough Financial Times.

3. See your separation as a new beginning. Change is uncomfortable for many people. However, if you remain open you can embrace this as a new opportunity.

4. Be flexible and creative. Think outside the box. Highlight different skills sets depending on what particular job opportunity you are pursuing.

5. Draw on past successes to build your confidence.

Stephanie Randell, a human resources professional with an international consulting firm offers several suggestions:

1. When you receive your initial paperwork, make sure to review and meet deadlines for when paperwork is due back to human resources. Time sensitive information not submitted in a timely fashion can impact when benefits begin, etc.

2. Ask questions about benefits, if applicable. What happens to your life and health insurance? What happens to your 401(k) or pension plans? Who do you contact if you have additional questions?

3. If your company has a non-compete clause, will it be waived in the event you are down-sized due to the economy? Can you be rehired, if a position becomes available?

4. If you were issued equipment such as a laptop, printer, copier or cell phone, can the company assign this equipment to you?

5. Will your company conduct an exit interview? If not, can you request one? Go to the exit interview prepared with questions on what you can expect to happen next?

6. Take advantage of employee assistance and outplacement services being offered through your employer. The employee assistance program provides counseling services to employees. The outplacement services assists employees in creating resumes, preparing for interviews and possibly finding new employment.

7. Update your resume and see how your skills can be transferrable to a new position.

Here are other recommendations that should be considered as well:

1. Establish an emergency fund. It is recommended that every household keep six months to one year's monthly expenses in an emergency fund. If you save at least six months of your take home pay, this should assist you in making it through the tough financial times. Remember, money set aside for emergencies should be kept in accounts that do not lose value due to market fluctuation. FDIC–insured savings accounts are normally a good choice for holding your emergency fund.

2. Price health insurance costs. If you will no longer be covered by your company's health insurance plan, you probably have no idea the costs associated with an individual health insurance plan. Most major insurance companies have websites where you can obtain quotes based on the coverage you desire. When deciding on which plan is appropriate for you, look at your current trend in doctor visits, laboratory and exam expenses, and medications. Try to find the plan with a deductible and benefits that you feel would be the best fit for your situation.

3. Make a decision about your retirement plan. If you have a 401(k), 403(b), 457 or any other retirement plan with your current employer, you should decide whether you are going to take a distribution, leave the plan with your current employer or request a direct rollover. Make sure all necessary forms are requested and submitted in a timely fashion. Ask your retirement specialist for assistance. To determine which route is best for you, you should consult a tax professional.

Remember: The end of a job does not represent the end of YOU! You are not your job. There are several things that you can do once you leave your current employer. You can look for new employment, enjoy retirement, or start your own business. Whatever you decide, do what works best for you and your lifestyle. For more information on retirement issues, please visit our website at Plan Well Retire Well.

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