As a major business with thousands of employees, it is not uncommon for Amway to announce workforce reductions in an effort to cut costs or restructure its workforce.
Unfortunately, employees may not receive much advance notice. So, what should you do if you find yourself suddenly laid off?
Unless you can retire comfortably, your primary concern is likely how you’re going to get by before you find a new job. Here are seven financial steps that’ll help you survive an Amway layoff.
SIGN UP FOR UNEMPLOYMENT
Unemployment benefits can help make sure that your essential household expenses are covered. Keep in mind that unemployment rules vary by state. For example, some states may not pay unemployment benefits if you receive a severance payment.
UPDATE YOUR FINANCIAL PLAN – OR GET ONE
A layoff may mean some changes in your lifestyle, at least in the short run. With the uncertainty of when you’ll start working again, it can make for a confusing and stressful time. Talk with a financial adviser and put together a written plan that helps you navigate your options. It can provide some much-needed reassurance that you’re making the right decisions to lessen the financial and emotional impact of unemployment.
EXPLORE AMWAY SEVERANCE OPTIONS
If you are receiving a severance payment, you may have several different payout options. You should consider carefully the tax and cash flow implications of each one. Talk with a financial adviser who understands Amway’s benefits and can evaluate your situation to make sure you are selecting the right option.
Should you consider leaving Amway with severance, it is also important to understand incentive pay is considered earned income like salaried wages. This income is subject to payroll taxes and regular income taxes in the year received. Amway will issue a W2 for the tax year in which this benefit gets paid out. If possible, given your specific situation, you might try to get these benefits into the next tax year.
For those looking to collect Social Security in the year after leaving, don’t worry. Social Security will count these assets as earned in the year of actual retirement, not when paid out.
PRESERVE YOUR MONEY AND AVOID DEBT
At this time, you should think about putting all major purchases on hold. Just focus on your essential expenses (mortgage, car payment, electricity, etc.). Getting through a period of unemployment is all about properly managing your cash flow. Your savings need to last until you get a new job. New debt payments will squeeze your cash flow. So, resist the urge to use credit cards on anything that isn’t an absolute necessity.
CUT EXPENSES, IF POSSIBLE
Hopefully, your period of unemployment is short. But, it could last for months and, in some extreme cases, even years. Therefore, you have to stay on top of your budget. Review your monthly expenses and identify any you can reduce or eliminate. You’ll need to get accustomed to living on a lower income for the time being.
LEAVE YOUR AMWAY 401(K) AND RETIREMENT ACCOUNTS ALONE
It can be really tempting to dip into your Amway 401(k) and other retirement savings to ease the pain of a layoff. Unless you are ready to retire, don’t do it. Withdrawing money from your retirement accounts prior to your planned retirement date could mean having to work longer or scaling back your retirement goals. There are also tax consequences and early withdrawal penalties, if you take money out before age 59 ½.
MAINTAIN HEALTH COVERAGE
Medical bills are the biggest cause of bankruptcy in the United States. Even without a job, you may still have options available to you for health insurance. If you are married, you may be able to join your spouse’s employer plan. Or, since Amway is a large company, you may qualify for COBRA. Another option is to shop around on the Affordable Care Act Exchange.
You should look at more than just the premium when evaluating health insurance. Examine the quality of coverage, deductibles, co-pays and out-of-pocket expenses. If you have a choice, make sure to pick a plan that gives you the coverage you need first and then shop on price.