What to do if you have been the victim of downsizing?

August 18, 2020
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This is an opportunity to review, understand, and organize your finances. Just because a temporary obstacle has been put in place does not mean your financial future should be permanently impaired.  

Here are a few things that can help you remain financially resilient during this transition.


Unemployment Insurance programs are there to assist workers going through job transitions. 

For Massachusetts residents, you can simply go to www.Mass.gov to file an unemployment claim which can help offset expenses for up to 30 weeks in many cases. Many other states allow up to 26 weeks of assistance. Of course, Federal assistance is a topic making daily headlines in the summer of 2020.

At last count, there were 16 well-known firms in New England conducting layoffs, including Bose, GE, and Raytheon, besides all the small businesses that are suffering during this economic downturn.

Emergency funds are created for times such as these. If the emergency fund is not fully in place, then investment accounts could be the next source of funds. If you place a trade, keep in mind the tax consequences of any trade that is done. 

For brokerage accounts, any gains can be subject to capital gains taxes while a distribution from a retirement account, such as a 401(k), will be subject to ordinary income taxes.

If you do make a trade from a brokerage account, it is generally advisable to shed your losing positions before you rid your winners. It can be hard enough to find a great stock, therefore do not fill up your portfolio with a bunch of laggards.


As you may be the C.F.O. of your household, make it a point to understand your cashflows. How much monthly spending occurs? What portion of the spending is unnecessary?  

The two easiest ways to identify spending is either completing a budget worksheet or by examining your checking account, especially if your bank offers budgeting analysis tools online.

To reduce financial stress, trimming unnecessary expenses can be a prudent action.

Health Insurance  

Except for the mortgage or rent, this is often the biggest expense that a family has each month. Each state health plan has varied rules for open enrollment due to job loss. In Massachusetts, the Mass Health Connector allows for 60 days to apply for health coverage after someone loses healthcare coverage.

Health care coverage may no longer be mandatory, and it may be tempting to go without paying the monthly health care premium, but the risk-reward ratio generally favors having health insurance in place. Simply put, medical bills are not known for being small and we are still amidst a global health pandemic.

Health care savings account (HSA).  Nowadays most HSA plans allow the participant to carry over account balances to the next year. Some firms still use flexible spending accounts where the balances do not carry forward. If you worked at a locally based firm, such as Bose or Raytheon, you may want to double-check and identify if your contributions will terminate at the end of the year or not. 


You generally have three options with your prior 401(k) account.  

  1. Leave the monies with your prior retirement plan
  2. When you join a new company, roll over the monies into the new 401(k) plan
  3. Roll over the money into an IRA or a Roth IRA

Some companies make 401(k) contributions towards the end of the year, this includes those that offer 401(k) profit-sharing. If this applies to you, then you may want to leave your prior 401(k) where it is for now for the possible year-end contribution.

One reason why you will want to roll over your prior 401(k) balance to your new 401(k) plan is if the new plan offers the ability to take loans. Many 401(k) plans do offer loans up to 50% of the account balance with a maximum loan of $50,000.  

Rolling over the prior 401(k) account to an IRA (or Roth) can allow for the consolidation of assets as well as a wider spectrum of securities to invest in.  

You may want to ask, are your 401(k) monies invested according to your risk tolerance, and do they align with your environmental and social values?

Work Benefits

How many benefits were you receiving from work? Oftentimes people will sign up for benefits such as dental and life insurance through work because it can be quite affordable.  

Before you book your next visit to the dentist, make sure that you have insurance to help pay for it. Also keep in mind, there may be a significant difference in pricing between group and individual policies.

Call to Action

Whether you have been impacted by downsizing or not, planning for a transitioning period may be in your interest. Planning is all about the consequences. Take this call to action and start to plan today to avoid any negative consequences that could happen if you fail to plan. To learn more, please download our free “Peace of Mind checklist.”