How to Financially Plan for Returning to Work
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What is the main topic discussed in this episode?
Here's your Money Briefing for Thursday, August 20th. I'm Charlie Turner for The Wall Street Journal. With some of us making the transition from working at home to going back into the office, now may be a good time to make sure our budgets are in good shape.
Because of this economic uncertainty, it's sort of changing the game when it comes to emergency funds. And so a lot of planners are saying, save more if you can.
That's our personal finance reporter, Veronica Dagger. She's here to discuss how to financially plan for going back to work. That's after the break.
As businesses and schools tentatively start to reopen, employees heading back to work are thinking through the steps they'll need to take to avoid catching the coronavirus. But they may also want to make sure their finances are in order in case they do get sick. Our personal finance reporter Veronica Dagger is here with some financial tips you might want to keep in mind as you return to the office.
What immediate budgeting changes should you make when returning to the office?
So Veronica, generally speaking, when people are returning to work, what kinds of financial considerations should they be thinking about?
Well, you should start thinking about your budget again in a different way, making sure you have a will in place, thinking about your insurance coverage. And no matter how old you are as a worker, you want to make sure all these things are in good shape as you return to the office or school building.
Let's talk about the importance of having an emergency fund. Why is that important and what changes should a worker be considering?
Right. So you never know what's going to happen in life. I think the coronavirus is a prime example of that. Historically, financial planners have recommended three to six months worth of expenses saved in cash for emergencies like a broken down car or a health crisis.
How much emergency savings is recommended amid COVID-19 uncertainty?
But because of this economic uncertainty, it's sort of changing the game when it comes to emergency funds. And so a lot of planners are saying save more if you can. So, for example, you might want to save 12 to 18 months of expenses to cover those essential expenses. And that can give you a bit of a safety net in case of a job loss or an extended illness.
Now, what about getting sick with COVID-19 after returning to work? What kind of financial preparations can be made there?
Right. So if you think you're going to get really sick and this takes you out of the workforce, you want to look at things like adjusting your asset allocation for your investments. You want to make sure you have adequate funds saved outside of the stock market in something like cash or a money market fund or CDs or short term bond funds, because you want to be able to cover your income shortfall for an extended period of time, like five to seven years in some cases.
And should workers also check to see if they're eligible for things like paid sick leave?
Yeah, so that can be crucial. So you want to see what sick leave or benefits your employer provides in the event that you get COVID-19. There's also something called the Families First Coronavirus Response Act, and that provides protections to employees who qualify, such as Two weeks of paid sick leave for those who are quarantined or experiencing COVID-19.
How should you adjust investments and cash reserves if you could be out of work long-term?
If you're not eligible to receive benefits from this program, you want to check with your local city and state regulations to see if there's any additional COVID-19 relief benefits that are available to you.
And if they're going to be out for a while, I think long-term disability insurance is important as well.
Absolutely. Yeah. So you want to check that you're covered by your employer-sponsored long-term disability insurance. And depending on your employer, this may replace up to 60% of your gross income if you become disabled. If your employer doesn't provide adequate long-term disability coverage, really look into securing a supplemental policy from a private insurer, especially if you are a sole breadwinner.
This isn't something people like to think about, but is this a good time to make out or update your will?
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–1:05
2
What immediate budgeting changes should you make when returning to the office?
1:05–1:52
3
How much emergency savings is recommended amid COVID-19 uncertainty?
1:52–3:16
4
How should you adjust investments and cash reserves if you could be out of work long-term?
3:16–4:03
5
What paid leave and long-term disability benefits should workers check before returning?
4:03–4:44
6
When and how should you create or update a will, power of attorney, and health proxy?
4:44–5:22
7
What practical steps ensure loved ones can access your financial and medical documents?
5:22–5:28
Speakers
2 identifiedMore from WSJ Your Money Briefing
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