Why i socked away over $500,000 in a ‘layoff fund’ | members only

Through these two excruciating years of belt-tightening, we learned a lot about what is truly valuable to us and, perhaps more important, what we can happily do without. While Broadway

tickets to _Wicked_ might be fun at $200 a pop, hearing the New York Philharmonic on a picnic blanket in Prospect Park is also phenomenal — and free. While we still hope to one day take a

family trip to Rome, knowing that we’re on solid financial footing comes first. And even after Jason and I clawed our way back into full-time jobs, those lessons stuck with us since we knew,

in our bones, that one (or both) of our jobs could easily go belly-up again. That’s when the idea of a layoff fund clicked into place. Even though we were back to two incomes — and as

tempting as it was to let loose and live a little — we made a pact to clamp down on “lifestyle creep,” sticking to the same thrifty practices we’d perfected while unemployed. We packed

lunches for the office. Since Jason needed a car to get to work, he paid $1,400 for a clunker that miraculously never broke down during his hour-long commute each way. And, while we took

pains to make sure our daughter didn’t feel deprived, setting money aside for extracurriculars like rock climbing and summer camp, she developed a habit of asking, “But Mommy, how much does

_that_ cost?” even though we assured her that she shouldn’t worry. Meanwhile, Jason and I funneled over half of every paycheck into the layoff fund — an online high-yield savings account

we’d selected since it had an annual percentage yield (APY) hovering over 4 percent, the highest we could find at the time. Over nine years, with compound interest, that fund grew to more

than $500,000. And since our expenses had been whittled down to under $80,000 per year, this meant that even if we were both laid off, that half million could cover our bills for over six

years before running out, meaning we wouldn’t have to take on debt or dip into our retirement savings to make ends meet while in between jobs.  Once Jason saw the results, he stopped

complaining to his pals about how cheap his wife was and began bragging about all the money we’d socked away. HOW TO BUILD A LAYOFF FUND (AND ITS BENEFITS) While many financial experts

recommend that workers of all ages have three to six months’ worth of expenses stashed in an emergency fund, our decision to supersize our safety net with a hefty layoff fund made sense

given our job insecurity — and it could make sense for other older workers as well. “In today’s volatile economy, having a layoff fund is crucial for individuals over 50,” says Jake Falcon,

founder and CEO of Falcon Wealth Advisors in Kansas City. “This age group often faces higher risks of layoffs due to age discrimination and the increasing trend of companies restructuring to

lower costs. A layoff fund provides a financial cushion that can reduce stress and allow individuals to focus on finding the right job rather than the first available one.” The first step

to building a layoff fund is to take an inventory of your monthly expenses so you can not only assess what could stand for a trim but also so you know how much to put away to tide you over

for a certain period of unemployment. While the amount Falcon recommends varies by circumstances, he suggests six months at a minimum, presuming you have no non-retirement investments you

can pull from in a pinch. “It would also depend on the individual’s industry,” he says. “If they are in a high-demand job function and can get a new job relatively easily, then they may not

require as much cash on hand. If their industry is very niche, or if they want to change industries altogether, then it might require more liquidity to bridge the gap.”