Show Transcript
The initial shock of losing a job can put a lot of stress on a person. And figuring out next steps while trying to get your finances in order can feel overwhelming. Nicole Ewing, Director, Tax and Estate Planning, TD Wealth, joins Kim Parlee to discuss how to navigate this period.
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* [AUDIO LOGO]
* We've been hearing a lot about layoffs across various sectors. And losing a job is not an easy thing to happen or process. The initial shock can put a whole lot of stress on someone. And figuring out next steps while trying to get your finances in order can feel overwhelming.
* Nicole Ewing, Director of Tax Estate Planning at TD Wealth, joins me now to discuss what you can do to help make this process, this change, a little bit easier, though it's still really, really hard. OK. So how do you stay calm during this time? What are some things you can do?
* And I don't want to minimize the experience that people will be going through. But if you can, try to stay focused on creating that action plan. That will give you some direction to how you're going to be dealing with things from this point going forward. So that would be engaging your financial advisor, your lawyer to understand what your rights are, perhaps your accountant to be talking about some of the cash-flow issues that you might be having.
* Are there any support programs? Very typically, there are support programs that the employers may offer. Avail yourself to those. There's going to be retraining programs. There can be a lot of different tools that are being made available.
* And it can maybe feel like you want to be done with them completely. Take them up on every option that they're providing to get that-- just it's an additional tool to help you move forward.
* Get the support, get the resources. What are some of the administrative things that you need to take care of at that time, too?
* So, well-- so firstly from an employment-insurance perspective, the advice of the government is to do that immediately. We're going to apply immediately for that. But other things that are going to be important is really gathering your records and making sure that you know where everything is.
* What accounts do you still have with your employer? Do you have pension plans? Do you have benefit plans? Really gathering all of that information in to make sure that you have the information that you need in order to be planning for it.
* I think it's also important to include the contact information of any of the individuals that you might be wanting to reach out to, as well, because once we lose our email access or your phone access, sometimes those resources aren't as easy to find online as we would want them to be. So having those key contacts would be really important as well.
* Yeah, write them down while they're fresh. If you have a pension with your employer, what happens to it? What should you be doing about it?
* Yeah, so I mean, the answer is it depends. It depends on the type of pension plan that you have. It depends on whether-- to what extent things are vested. But typically speaking, a defined benefit plan will have the option of either staying, keeping the pension with your employer, or moving it over to your new employer. Defined contribution will typically let you take that and invest it elsewhere.
* But you want to be really understanding what your rights are and what your pension circumstances are. So there's a pension statement that your employer is required to provide to you within 30 days. And that's where you're going to have all of the information about what your commuted value is going to be, what options you have in terms of keeping it or moving it. So that's a key date that you need to be aware of. That's a really critical one.
* Particularly when we're in these high-stress situations, some of us tend to shut things out and tend to not be moving as quickly as we need to. There are going to be deadlines. So with pensions--
* You don't want to miss them.
* --you have to know what they are.
* Yeah. Yeah, good point. What about-- I mean, even just managing expenses, I mean, some people will just freeze and stop everything because they don't have a paycheck anymore. Others maybe don't and they should. Thoughts around that?
* Well, I think it's important to really-- this is the time when we want to look at discretionary versus non-discretionary and have a sense of, what are we spending our money on? Time to pull out that budget and look and see where we can maybe pull back or cut back. But again, doing that overall-- look at your assets, look at potential other income sources that you may have.
* Debt is an important one because we don't want to be falling behind. And sometimes, there are arrangements that you can make with different creditors that will allow you to maybe press pause for a time. So making sure that you're not just panicking about not being able to have that payment but calling up people and saying, what options do I have, Is there anything you can do for me here?
* What about withdrawing money from your savings or your retirement savings, and your RRSP, and TFSAs? And when is-- because you're not supposed to touch these things.
* Yes, that is true. And to the extent that we can not touch them, that's great. But for some people, that might be the only savings that they have. That might not-- it might be the only income source that's available. So it's important to look at that and consider whether it is appropriate.
* It is your money. And if you need it, you can take that out. There are going to be tax implications, but if your income is lower that year, perhaps they're not going to be as high as they otherwise would be. You will lose your contribution room. So we want to keep that in mind.
* And maybe think about other alternatives. So TFSA-- if we've got some money in our TFSA, that allows us to pull that out without any tax consequences. Our contribution room will regenerate the following year, so we're not losing any of that. So this is where we can really benefit from talking to a financial advisor, who looks at our overall portfolio and can help us figure out where it's best to be pulling those assets from.
* What about whether we should be looking for a job right away? And I'm not talking about whether psychologically, but from a financial standpoint.
* Right. Well, I mean, it depends. [LAUGHS] There are going to be different circumstances for different people. And so if you have-- you may have a severance payment that allows you to take a little bit of a breather and rethink about how you want to be moving forward.
* I was recently speaking with an associate of mine who panicked and immediately went and found another job under her skill level, well beneath what she was capable of doing, well beneath what she was-- should be paid for her brilliance, frankly. And she hadn't shared it with her network. So she hadn't shared that she had lost the job, and she accepted a new one too early.
* And once I found out that she was available, my goodness, there are so many opportunities for somebody like her. This is where we need to tap into our network. So she was able-- once she did that and shared the information-- which can be hard. There's a lot of emotions around that.
* But yeah, I mean, share it with people. Let people help you find those connections. And yeah, and don't sell yourself short. There are a lot of opportunities. And your friends, and colleagues, and former colleagues will be your cheerleaders.
* Absolutely. And also, too, I think from an EI standpoint, you have to be careful just of that.
* Oh, yes. Well, I mean, from an EI you must be ready and available for work. So if you are receiving EI or applying for it, you must be ready and available to accept a job and be actively looking for one. So yeah, make sure you're doing that if EI is relevant to you.
* And lastly, I was going to say, we always end almost every chat we have as, talk to somebody. Talk to an advisor if you have one because they will be able to help you with these decisions.
* Oh, this is a prime opportunity. This is where the value can easily be demonstrated, that they will be able to help you navigate through this. Firstly, they will have clients who have also experienced this. And they might be able to pull some lessons that they've learned from them and share them with you.
* They'll also be able to help you figure out, from a financial perspective, what you should be doing both in the short term, long term, whether your goals have now changed as a result. Maybe you're saying, I've moved up my retirement and I'm not going to go back to work. So yes, definitely, the professionals can help you figure out what your options are and allow you to make that informed decision for yourself
* Always a pleasure, Nicole. Thank you.
* [AUDIO LOGO]
* [MUSIC PLAYING]
* We've been hearing a lot about layoffs across various sectors. And losing a job is not an easy thing to happen or process. The initial shock can put a whole lot of stress on someone. And figuring out next steps while trying to get your finances in order can feel overwhelming.
* Nicole Ewing, Director of Tax Estate Planning at TD Wealth, joins me now to discuss what you can do to help make this process, this change, a little bit easier, though it's still really, really hard. OK. So how do you stay calm during this time? What are some things you can do?
* And I don't want to minimize the experience that people will be going through. But if you can, try to stay focused on creating that action plan. That will give you some direction to how you're going to be dealing with things from this point going forward. So that would be engaging your financial advisor, your lawyer to understand what your rights are, perhaps your accountant to be talking about some of the cash-flow issues that you might be having.
* Are there any support programs? Very typically, there are support programs that the employers may offer. Avail yourself to those. There's going to be retraining programs. There can be a lot of different tools that are being made available.
* And it can maybe feel like you want to be done with them completely. Take them up on every option that they're providing to get that-- just it's an additional tool to help you move forward.
* Get the support, get the resources. What are some of the administrative things that you need to take care of at that time, too?
* So, well-- so firstly from an employment-insurance perspective, the advice of the government is to do that immediately. We're going to apply immediately for that. But other things that are going to be important is really gathering your records and making sure that you know where everything is.
* What accounts do you still have with your employer? Do you have pension plans? Do you have benefit plans? Really gathering all of that information in to make sure that you have the information that you need in order to be planning for it.
* I think it's also important to include the contact information of any of the individuals that you might be wanting to reach out to, as well, because once we lose our email access or your phone access, sometimes those resources aren't as easy to find online as we would want them to be. So having those key contacts would be really important as well.
* Yeah, write them down while they're fresh. If you have a pension with your employer, what happens to it? What should you be doing about it?
* Yeah, so I mean, the answer is it depends. It depends on the type of pension plan that you have. It depends on whether-- to what extent things are vested. But typically speaking, a defined benefit plan will have the option of either staying, keeping the pension with your employer, or moving it over to your new employer. Defined contribution will typically let you take that and invest it elsewhere.
* But you want to be really understanding what your rights are and what your pension circumstances are. So there's a pension statement that your employer is required to provide to you within 30 days. And that's where you're going to have all of the information about what your commuted value is going to be, what options you have in terms of keeping it or moving it. So that's a key date that you need to be aware of. That's a really critical one.
* Particularly when we're in these high-stress situations, some of us tend to shut things out and tend to not be moving as quickly as we need to. There are going to be deadlines. So with pensions--
* You don't want to miss them.
* --you have to know what they are.
* Yeah. Yeah, good point. What about-- I mean, even just managing expenses, I mean, some people will just freeze and stop everything because they don't have a paycheck anymore. Others maybe don't and they should. Thoughts around that?
* Well, I think it's important to really-- this is the time when we want to look at discretionary versus non-discretionary and have a sense of, what are we spending our money on? Time to pull out that budget and look and see where we can maybe pull back or cut back. But again, doing that overall-- look at your assets, look at potential other income sources that you may have.
* Debt is an important one because we don't want to be falling behind. And sometimes, there are arrangements that you can make with different creditors that will allow you to maybe press pause for a time. So making sure that you're not just panicking about not being able to have that payment but calling up people and saying, what options do I have, Is there anything you can do for me here?
* What about withdrawing money from your savings or your retirement savings, and your RRSP, and TFSAs? And when is-- because you're not supposed to touch these things.
* Yes, that is true. And to the extent that we can not touch them, that's great. But for some people, that might be the only savings that they have. That might not-- it might be the only income source that's available. So it's important to look at that and consider whether it is appropriate.
* It is your money. And if you need it, you can take that out. There are going to be tax implications, but if your income is lower that year, perhaps they're not going to be as high as they otherwise would be. You will lose your contribution room. So we want to keep that in mind.
* And maybe think about other alternatives. So TFSA-- if we've got some money in our TFSA, that allows us to pull that out without any tax consequences. Our contribution room will regenerate the following year, so we're not losing any of that. So this is where we can really benefit from talking to a financial advisor, who looks at our overall portfolio and can help us figure out where it's best to be pulling those assets from.
* What about whether we should be looking for a job right away? And I'm not talking about whether psychologically, but from a financial standpoint.
* Right. Well, I mean, it depends. [LAUGHS] There are going to be different circumstances for different people. And so if you have-- you may have a severance payment that allows you to take a little bit of a breather and rethink about how you want to be moving forward.
* I was recently speaking with an associate of mine who panicked and immediately went and found another job under her skill level, well beneath what she was capable of doing, well beneath what she was-- should be paid for her brilliance, frankly. And she hadn't shared it with her network. So she hadn't shared that she had lost the job, and she accepted a new one too early.
* And once I found out that she was available, my goodness, there are so many opportunities for somebody like her. This is where we need to tap into our network. So she was able-- once she did that and shared the information-- which can be hard. There's a lot of emotions around that.
* But yeah, I mean, share it with people. Let people help you find those connections. And yeah, and don't sell yourself short. There are a lot of opportunities. And your friends, and colleagues, and former colleagues will be your cheerleaders.
* Absolutely. And also, too, I think from an EI standpoint, you have to be careful just of that.
* Oh, yes. Well, I mean, from an EI you must be ready and available for work. So if you are receiving EI or applying for it, you must be ready and available to accept a job and be actively looking for one. So yeah, make sure you're doing that if EI is relevant to you.
* And lastly, I was going to say, we always end almost every chat we have as, talk to somebody. Talk to an advisor if you have one because they will be able to help you with these decisions.
* Oh, this is a prime opportunity. This is where the value can easily be demonstrated, that they will be able to help you navigate through this. Firstly, they will have clients who have also experienced this. And they might be able to pull some lessons that they've learned from them and share them with you.
* They'll also be able to help you figure out, from a financial perspective, what you should be doing both in the short term, long term, whether your goals have now changed as a result. Maybe you're saying, I've moved up my retirement and I'm not going to go back to work. So yes, definitely, the professionals can help you figure out what your options are and allow you to make that informed decision for yourself
* Always a pleasure, Nicole. Thank you.
* [AUDIO LOGO]
* [MUSIC PLAYING]
