Wednesday, January 14, 2009

How to Weather the Recession


Since I suspected layoffs were coming before I was laid off last week, I had already given thought to how I might ride out this terrible recession even if I could not find a job right away. Here are a few things I am considering. Maybe some of them will be instructive to you. If you can think of other things, please add them as comments here so that I can keep this list in one place.

I do not have much in the way of savings. I do have a fair amount of home equity, and I do have smallish retirement funds.
  • Take early Social Security this fall after I turn 62. There are a lot of drawbacks to this because of a permanently reduced monthly benefit and limitations on earnings until I reach full retirement age of 66.
  • Refinance my home. I currently have a 15-year mortgage. Interest rates are declining. I could refinance and cut my monthly mortgage payment in half.
  • Exhaust my home equity loan to keep up house payments. Makes sense to me since my current rate on this loan is about 1% lower than my mortgage loan.
  • Start taking a monthly payout from my 401(k)/IRA accounts. This money was intended to be "money for a rainy day" and for retirement, whichever came first. The balance has been badly damaged by the recession, but most of us are in the same boat there.
Of course, if I can find some employment reasonably soon, I may not have to do any of these thing or just some of them. Your thoughts? Ideas?
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