Welcome back to “Ask an Advisor,” the advice column where real financial professionals answer questions from real people. The topic can be anything in the world of finance, from retirement to taxes to wealth management — or even advice on advising.
Both financially and emotionally, few life events are more disruptive than losing a job. But in the United States, it’s a common experience — 40% of Americans have been laid off or fired at some point in their lives, according to the Bureau of Labor Statistics.
And in recent years, it’s been happening more often. U.S. companies announced 721,677 job cuts in 2023, according to the research firm Challenger, Gray and Christmas — a 98% increase from the year before.
And of all America’s industries, tech suffered by far the biggest bloodletting: 168,032 layoffs in one year.
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One of those unlucky workers was a Financial Planning reader in New York City, who until recently was a video producer at a prominent tech company. Newly unemployed and not sure when she’ll find her next job, she wonders how to stay on track with her long-term savings — or whether it’s worth it to keep saving at all.
For guidance, she turned to the experts. Here’s what she wrote:
Dear advisors,
I recently got laid off, and I’m wondering how to pick up the financial pieces.
In particular, what do I do about my retirement savings? When I was let go, I had about $19,000 in my 401(k). Separately, I also have a Roth IRA with about $40,000 in it.
Should I roll my 401(k) into the IRA? Or wait until I get another job, and roll my savings into the 401(k) there? Or is there another option? And in the meantime, should I keep contributing to my Roth IRA or hold off for now?
I have $18,000 in severance, and my husband still works. I’m fairly confident I can survive for the present — I just want to make sure I’m not damaging my future. What should I do?
Sincerely,
Asking in Astor Place
And here’s what financial advisors wrote back:
