Thread regarding Ford layoffs

Take steps early to prepare

If you have an inkling that you will be retiring/be laid off in the next 5 years you should be stashing cash and taking steps to ensure that your portfolio has enough cash in it to bridge you to social security and handle any emergencies. Your priority is to be liquid and preserve your next egg.

If you are 401k/IRA rich and cash poor, you will have a cash-flow problem. If you are unable/unwilling to find new employment you will withdraw money from 401k/traditional IRA which will be taxed as ordinary income. That extra ordinary income will often cause your Obama care subsidies to disappear - suddenly healthcare goes from $90 a month to $800 a month. To compound the problem if the market is down when you need the cash flow (and you don’t have a cash position) you will erode your nest egg much quicker than you expected.

Many of my prior coworkers have found themselves in a financial bind post layoff/buyout despite having what they perceived as large 401k/IRA balances/lump sum distribution. Take steps now to ensure you are not in a bInd later. It is easy to get caught up in the accumulating the 401k/IRA but not thinking about the de-accumulation phase.

Also remember the 5 year rule for converted Roth IRA money. Some coworkers were surprised about that when they used Roth IRA for cash flow got hit with a 10% penalty and unexpected tax.

You worked hard for your $, preserve it.

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Post ID: @OP+1nhHP4DM

7 replies (most recent on top)

Expecting a major stock market crash in next 7 years....sell everything then

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Post ID: @jpt+1nhHP4DM

@tje+1nhHP4DM I agree that many people walk into tax related "everyday situations" because they are not aware of the laws. You posted a very good advice/example.

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Post ID: @ujb+1nhHP4DM

@qms

Both ObamaCare and Medicare premiums are tied to your income, the more income the higher the premiums.

I can tell you what happened to one person. They got cut. Their Ford healthcare took them to the end of the year they were cut. They applied for ObamaCare the following year with basically no income (living off of savings account) so they had nominal premiums. Then they had some un-budgeted expenses which depleted their savings account (health expenses, new roof, new vehicle and such) that led them to withdraw $200,000 from their rollover traditional ira. The $200,000 is treated as income so now they had zero subsidies from Obama Care and had to pay full sticker premiums. Their budget hadn’t anticipated the premium increases so the following year they took another large distribution.

Others have had similar stories with Medicare Premiums increasing for the same reason- IRA withdrawals treated as ordinary income.

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Post ID: @tje+1nhHP4DM

@OP, your posting is very helpful, thank for taking the time to educate us. I spent decades building my 401k but never thought about tax and healthcare implications when withdrawing money.
Can you or someone give more details on healthcare? How did your premium go from $80 to $800.

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Post ID: @qms+1nhHP4DM

An inkling that you will be let go from Ford in the next two years is if you are salaried in NA. Don't believe me? Look at the news articles about the layoffs:

28k salaried in NA.
70k salaried in the of the world.

That disparity will continue to grow.

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Post ID: @fed+1nhHP4DM

I can say as someone who was forced to find work at 51 that it's possible to find a job you love, where you can thrive and be financially successful. Performance history matters.

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Post ID: @ual+1nhHP4DM

Sadly people in their 50s and 60s cannot rely on being employed. People are being forced out of the workforce before they are ready.

Roughly 50% of people are steadily employed through their 50s.
Roughly 35% of people bounce in and out of the workforce in their 50s.
Roughly 15% of people are out of the workforce in their 50s.

The stats for those in their 60s is much worse.

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Post ID: @itq+1nhHP4DM

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