Covid-19, Emergency Preparedness, job loss, Retirement

Playing the ‘what if’ game if we lost our income.

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It’s no secret that it’s a huge mess out there.  This health crisis has caused so much loss, both in life and security.  My heart breaks for all those who have lost loved ones.  We lost a very good friend, not from Coronavirus, but from not going to the hospital when an emergency surgery was needed because they feared contracting the virus. A ton of missteps by both health workers and the family members.  But that’s not what this post is about.

I want to talk about the economic mess.  Many people have been furloughed without pay, or let go completely from their jobs.  Many small businesses have closed.  Unemployment is at an all-time high. Stimulus checks won’t be enough, and the government can’t keep printing money.  It will render cash worthless.  A recession may soon follow if we all can’t get back to work.  But we can’t go back too soon, or we will be right back to the health crisis.  It’s definitely a conundrum.

My husband, fortunately, has kept his job so far, but we are aware that he could lose it.  No job is safe, in my opinion.

So, we decided to play the ‘what if’ game.  What if my husband lost his job tomorrow?  What steps would we take?

This morning we sat down at the kitchen table and started listing in order what we would do if he were to be let go tomorrow.

Immediately:

  1. Apply for unemployment.  It won’t cover anywhere near his normal paycheck, but it will be something.  Virginia is in the top 10 for top balanced fiscal budgets and Virginians aren’t having a problem receiving it.
  2. Hoard money.  Stop paying for gifts, subscriptions, clothing, personal spending, travel (obviously). Eat from pantry, freezer and fridge.  No need to worry about credit cards, car loans — I’m debt-free.
  3. Look for another job.  This may be difficult for several reasons.  Timing and age.  It’s not the best time to find a job, and our age would make it nearly impossible, however, our area has many more jobs than most, and I’m pretty confident that we both could get some type of work in our field.  (We aren’t that old, but old enough. 😉

In a couple of months:

  1. Sell home (if not able to find employment).  This area is very expensive, and real estate is ridiculously expensive.   We have a very strong housing market, even during Covid-19.  We would sell our present home and buy a much smaller one in a less expensive area outright. (No mortgage for us!)  We already researched this, and there are three areas we would consider: Southern VA, North Carolina and Florida.  We could possibly walk away with $230,000 in surplus.
  2. Sell one of our cars.  If we decided to retire from paid employment, we would definitely not need to support two SUVs.  This would save us almost $3,000 a year in expenses.
  3. Cash in my pension account. We would only do this once I turn 59 1/2, (which is one year from now) and only if it were necessary.

Down the road…..

  1. Take Social Security at 62. If my husband lost his job today (at 56), we would have to live off the proceeds of our cash savings and real estate surplus until we could tap into retirement plans at 59 1/2.  That is 2.5 years.  Our investments would grow to a nice sum, but we would only pull 3% out to make it last more than 30 years.  This would create a small shortfall, so we would start social security at 62.   We will have more than enough for one nice trip a year as well.
  2. Find part-time jobs.  If we did move into a smaller home in a new area, we both would look for fun part-time jobs to supplement our time and income. (I have my eye on working at a golf-club – when they reopen, of course.)

Our current plan (before a lay-off):

  1. SAVE MORE MONEY IN CASH.  We are fortunate to have some savings, equity in our home, and a good retirement portfolio.  However, we do realize that we are a bit short on available cash and only have enough to see us through for 6 months.  I would like to see that grow to at least 9 months to feel secure in a layoff situation.

Of course if my husband keeps his job, which I hope he will, we’ll have a different financial plan.  It’s just nice to know what to do ahead of a crisis, instead of being blind-sighted by it.

Hope you are all doing well and staying safe.

 

2 thoughts on “Playing the ‘what if’ game if we lost our income.”

  1. Here are some cold hard facts:
    #1 Good luck getting unemployment. My daughter has been waiting weeks. Ditto for Nick under the self-employment clause. he was supposed to get a phone call within 72 hours. That was weeks ago. Nothing.
    #2 Hoard money. Do it now. Learn about Dave Ramsey’s 4 Wall theory. It works great. Pay the minimums on your charge card. Food, Shelter, Utilities, Mobility are the four walls. Cash is king. If you’re concerned about paying off your charge cards, do it when the pandemic is over.
    #3 I know people who have found other jobs. Know what they’re doing? Working as sanitizers in the supermarkets and other retail establishments. Is that what you want to do? Risk your life like that? They are.
    #4 Sell home? To whom? People don’t have jobs nor any income. Real Estate sales here in NY are down 77%. My friend was supposed to sell last spring but he wanted to fix up his house more to get a higher price. Now? Good luck with that. He’s stuck with two properties. Nothing is selling.
    #5 Sell one of your cars? Again, I’ll ask, to whom? No one is driving. No one is going anywhere. No one is driving to work. Gas is -$40 a barrel (that’s a MINUS sign in there), which means they will pay YOU to lug their gas away there’s so much of an abundance.
    #6 Cash in your pension plan. That makes logical sense to do now because the govt has changed the tax rules on that. Check with your CPA. The penalties have been waived.
    #7 Take Social Security at 62. For your husband that’s 6 years away. Who knows what kind of a government we’ll have by then. Think Greece, Venezuela, etc. My husband was now forced to take SS at 63 (because there is NO work). We were waiting till he turned 65. This means our annual income will be lower than what we planned or anticipated for. Even his Disney Pension is in jeopardy as more parks are closed, more employees are furloughed, yada, yada, yada.
    #8 Find part time jobs. Think about what companies are open. Those will be the only jobs available. Do you want to work for Amazon, WalMart etc? When we downsized into a smaller home, hubby was out of work for 2.5 years. New location. New hiring problems. Who knew???
    #9 Save More Cash. Forget your home equity. This is no time to gamble with the roof over your head. Having 4 months of cash savings to see you through is a very serious problem. No one can recover from a calamity in 4 months. In today’s pandemic, you need at least a year or more, till a vaccine is available, to tide you over IMHO.
    Realistically Sharon, I’m sick and tired of all these financial variations over the last 6 decades of my life. Your rich. Your poor. Your rich again and then you’re poor again. No thanks. In 2001 we became self-sufficient and it has weathered us through The Great Recession of 2008 and now for The Great Depression of 2020. I had enough of this bullshit. Enough! I’m enjoying my somewhat steady life now. The outside world means nothing to us anymore.
    I just wish my kids were with us, but they’re not.They think Nick and I are two stupid old people. No one respects life experiences anymore.
    Oh well.
    Live and learn.

  2. At least you know that cruising will be out for the foreseeable future…Who knew?
    I am always a planner…this puts on my gloom hat…
    You might consider that the price of homes in your area might drop because many highly paid government contractors will also lose their jobs. The housing market could be glutted since those who rented their houses out might think about selling those houses instead of holding on to something that may or may not pull in income. How long can people hold on with rent and mortgage in forbearance? What does that mean when it all opens up again?
    We are saving for a different situation. If this goes on for a long time, and no one pays pay roll tax, will Social Security be significantly cut? I think the lowest rung will get money –but what about the rest? Will government pensions get slashed? Will state government pensions get slashed? What will that look like? If they keep paying at current level and add many more people, they will soon be printing useless money (see Germany in 1923).
    Right now I have a significant part of my 30-40 year old family members all unemployed. What will it look like when they come back into the picture? Will they be willing to continue to fund programs that they may never see? My son often tells me that he pays to support me….even though I paid in for 30 years….
    Europe will open soon–they never want to live the 1930’s again.
    Plan for the worst–live for the best!

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