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FINANCIAL CONSIDERATION$ DURING TRAN$ITION Presented by: Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc.

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Presentation on theme: "FINANCIAL CONSIDERATION$ DURING TRAN$ITION Presented by: Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc."— Presentation transcript:

1 FINANCIAL CONSIDERATION$ DURING TRAN$ITION Presented by: Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc.

2 DON’T PANIC! Make a plan – financial strategies, key moves and decisions can make the difference.

3 FIRST STEPS…… Promptly file for unemployment insurance Handle severance package with care Maintain health insurance Continue life and disability insurance Map out priorities

4 MAKE A FINANCIAL SURVIVAL STRATEGY

5 SURVIVAL BUDGET Sources of income Severance pay Unemployment benefits Cash from emergency fund Working spouse’s income (decrease tax withholding) Temporary work/freelance

6 SURVIVAL BUDGET Age 62 or older? Social Security (Earnings limit $15,480) Other Cash Sources (come with limits and consequences) Cash value of life insurance Home equity Reverse mortgage (62 or older)

7 SURVIVAL BUDGET Think Outside the Box: Collect on loans you have made Ebay? Barter

8 SURVIVAL BUDGET List expenses in order of priority Mortgage/rent Groceries/utilities Student loans Car payments/transportation Job search expenses Reduce discretionary expenses

9 STUDENT LOANS Income-based repayment Student loan forgiveness program o Public Service Loan Forgiveness o Only applies to Federal Direct Loan Program o Must make 120 on-time, monthly payments (10/1/2007)

10 NC Foreclosure Prevention Fund Meet Robert Sherwood “If you qualify, the NC Housing Finance Agency will make your mortgage payment directly to your loan provider or bank.”

11 NC Foreclosure Prevention Fund Job loss, divorce, illness 0% interest up to $36,000 If you remain in home, loan is forgiven at end of 10 years Special program for Veterans

12 SURVIVAL BUDGET Reduce contributions to retirement or educational savings accounts Consider government or private assistance Talk to your family o Adjust expectations o Teachable moment

13 MANAGE DEBT Avoid using credit cards Contact creditors – renegotiate Sell collateral (car, boat) Consolidate debts – carefully Credit counseling service  800/

14 YOUR CREDIT SCORE Review your credit report and score Ways to improve your credit score Correct any inaccuracies Higher scores = lower premiums for auto and homeowners insurance

15 Retirement Plan Decisions If you have a loan against your 401k it must be repaid per plan document o If not repaid, it is treated as a withdrawal - taxable income and if you are under 59 ½ a 10% early withdrawal penalty is assessed Consider rolling 401k into IRA Rollover o You control custodian and investments Review beneficiary designations

16 Retirement Plan Decisions Withdrawals are taxed as ordinary income for the year in which you make the withdrawal. Also, you may have to pay a 10% penalty tax for early withdrawal if you're under age 59½ unless an exception to the penalty applies. Tip: If you're considering taking funds from your IRA or retirement plan, you should consult a tax advisor regarding the specific tax treatment of your withdrawal.

17 Retirement Plan Decisions Consider a Roth Conversion for part or all of a 401k/403b if your income permits If you have a State 401k/403b o You may qualify for the “Bailey” provision Beneficiary IRA’s no longer bankruptcy protected unless State exemptions apply

18 Investment Decisions Stock options to exercise? Review asset allocation Roth IRA conversion Avoid short-term or risky investment strategies Don’t become a day-trader

19 STAY HEALTHY! Eat healthy foods Exercise Limit alcohol Seek support

20 REEVALUATE Network/NetWeave Be flexible o Relocate? Invest in yourself – reassess your career or consider additional job training Reestablish life goals Have faith, volunteer and help others

21 WHEN YOU RETURN TO WORK Celebrate – hug your loved ones Assess current financial situation Create a new budget Start saving and tackle debt Rebuild emergency fund Catch-up on retirement savings Get a check-up – good health is one of your greatest financial assets

22 Questions?

23 THANK YOU! Newsletter Sign-Up Available Presented by: Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc.


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