401K after being terminated from job
Hi Terry, I was just let go from a job I was at for 19 years. What do you recommend I do with my 401K account since the company will no longer be adding to it. Also, any suggestions on how to pay bills now that I do not have a job. I filed for unemployment and have a phone interview on 8/30/16. I have no savings. Credit card bills (high) as well as a car payment. Thank you for any help/suggestions. Lisa
Terry Says
Oh my goodness, I really feel for you. But you will get through this tough time. Leave your 40l(k) where it is for the next six months. That's not your big problem, and it will keep the money away from the temptation to use it now. (Later you can do a direct rollover to an IRA at Fidelity or Vanguard -- and hopefully leave it untouched to grow for your eventual retirement.) Right now, you need income -- fast! While you are looking for a job -- take anything that comes along, whether as a waitress, uber driver, senior aide, or a series of odd jobs. You don't mention living expenses, or dependents. That would impact your next steps -- assuming it takes a while to replace your old salary. Contact the National Foundation for Credit Counseling at 800-388-2227 and lay out your financial situation for them. They can give more specific advice on how to prioritize. Needless to say, your story demonstrates the importance of having savings for a crisis. And this is a crisis if there ever was one. But you only want to take money out of your retirement savings as a last resort. I'm assuming you're under age 59-1/2 -- so a withdrawal would trigger a 10 percent penalty AND income taxes on the money. That's the worst way to handle this.
