Saving your severance (Part 2)

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Glen D. Smith

By Glen D. Smith, CFP®, CRPC®

If the unthinkable happens and you lose your job, my immediate reaction is “Don’t panic!” Take some time to review your finances and your career aspirations.

If you’re under 59½ then cashing-out your 401(k) could have serious financial consequences, such as a 10% penalty. Talk to a financial planner who will recommend a variety of options.

Remember, you may not have to do anything. Most companies won’t force you to leave their 401(k) plans. Granted, they won’t continue to contribute, but they won’t make you redeem the value either. In fact, some employers have alternative plans available ex-employees, which would allow you to keep your money in one place. Click here for Part 1.

DO talk to a financial planner

You’re an expert in your own field. At Glen D. Smith & Associates, we have experts in financial planning, so whatever your field of expertise, we recommend that you take a step-back and look at your own situation.

We ask clients to review their finances and career goals. After a few discussions and some soul-searching, many of our clients decide to roll-back their career ambitions in favor of more family time or less travelling. In fact, some clients decide to change careers altogether.

It’s not a race

There are a few deadlines that usually relate to the severance package. Other-than-that, I always say to people “don’t rush.” Talk to a financial planner who will connect you with other professionals. Afterwards, we’ll slow-down the process and thoroughly analyze your finances. There’s still time for that bright red Pontiac but maybe not right now!

Glen D. Smith & Associates, Raymond James is located at 1029 Long Prairie Road, Suite C, Flower Mound, TX 75022. (469) 212-8072.

Glen D. Smith & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Any opinions are those of Glen D. Smith and not necessarily those of RJFS or Raymond James.

This case study is for illustrative purposes only. Individual cases will vary.  Prior to making any investment decision, you should consult with your financial advisor about your individual situation.

The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59½, may be subject to 10% federal tax penalty.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

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