According to an email ExxonMobil CEO Darren Woods sent all employees on October 21, the company faces “significant headwinds, more work to do and, unfortunately, further reductions are necessary.”
Days later, a voluntary separation program was announced to U.S.-based office workers. Involuntary separations appear likely if staff reduction goals are not met through voluntary retirements.
What does this all mean? For many, exiting ExxonMobil may become a reality.
If this happens to you, you’ll go through stages of grief: shock, anger, depression. Take time to process it all. Getting fired, especially after a lengthy career with a single employer, can be traumatic.
Ultimately, you’ll realize that you will have to move forward. What should you do? We’ll offer up six tasks for your new “to do” list.
1) Take stock of what you’ve got.
Understand the terms of your job loss. When’s your last day on the payroll? Will you receive a severance payment? Are you retirement eligible or will you terminate without retiree status? That makes a difference, especially in regard to health insurance and options for your pension benefit.
But also do an inventory of your assets and liabilities. How much do you have in your ExxonMobil Savings Plan account? Run that estimate of your eventual Pension Plan benefit. Do you have debts? How much do you have in other savings and investment accounts? At some point, you’ll need to know how much is there to support yourself.
If you’re under 59-1/2 and you can argue that your job loss is a consequence of COVID-19 related conditions, you may want to take a CARES Act distribution of up to $100,000 from an IRA if you have one or can establish one before the end of the year. You’ll be able to spread the taxes on the distribution over three years and avoid the 10% penalty that normally applies to those not yet 59-1/2 who take a distribution from their IRA.
2) Work on your budget.
Take a hard look at your last several months of bills. You’ll want to stay in your home initially, and keep food on the table and the utilities running. But you may have recurring discretionary expenses that, if necessary, you could avoid. For example, if money becomes tight, can your teenagers or college-age kids pick up some part-time work to reduce the drain on the Bank of Dad or Mom? Are there subscriptions and memberships you don’t often use, or other entertainment expenses that can be cut? You’ll need to know what your cash burn rate is to support your necessities.
If you are 62 or older, you may also need to consider applying for Social Security benefits earlier than anticipated, or withdrawing funds from your IRA or the EMSP if you should choose not to take a complete distribution when you leave ExxonMobil. There are trade-offs to each approach, with tax implications you’ll want to consider.
3) Decide whether you’ll seek work.
If you’re not yet ready (or can’t afford) to retire, you’ll want to register for unemployment compensation unless the terms of your termination explicitly prohibit you from doing so. Take time to consider your options. You may want to take time off, change career directions, work part-time, or become a consultant. This is not an immutable decision, but thinking about career next steps will focus your attention on moving forward, part of the healing process. Update your resume and network in earnest.
4) Make decisions about healthcare coverage.
If you’re retirement eligible, ExxonMobil currently offers retiree healthcare which you can use. If you’re not, one alternative is to get coverage under your spouse’s employer’s plan. Or you may need to shop the government exchange for an individual policy—you likely qualify for a special enrollment period. You can get continuation of your current ExxonMobil healthcare insurance for 18 months under COBRA—it’s expensive, but it’s familiar insurance. If you’re 65 or older, you should sign up for Medicare. Check out this video for the problems Medicare-eligible folks incur if they think they can rely on COBRA.
And speaking of health, make time to take care of your mental health. Too much stress can undermine your ability to deal with everything else. You know what to do: eat healthy, drink moderately, exercise regularly, sleep enough, and take care of your spirit. Take advantage of COBRA-mandated continuation coverage for the company’s Employee Health Advisory Program (EHAP)—you should be able to access EHAP counselors for at least 18 months while you find your footing.
5) Consider your housing options.
It’s not a decision you should make quickly, but your housing situation can significantly impact your finances. Would it make sense to downsize or move to a less costly community, or should you continue to pay your mortgage, looking forward to the day when you have no rent or house payment at all? This decision is only partially a financial one—where you live has an emotional component as well.
6) Get help.
You may have expected answers when you started reading this blog, and instead, you’ve got a fistful of questions. It’s a rough transition–going from full-time employee to the ranks of the unemployed–but those tough questions need thoughtful answers. Financial advisors have the tools and experience to help you evaluate your options, avoid big mistakes, and gain peace of mind. Ask around, check out websites, and interview to assess the chemistry between you. These are matters of consequence.
Contact us to discuss your circumstances.
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