When you lose your employer-sponsored benefits, it can feel overwhelming to know what to do next. But don’t worry—this guide will walk you through the essential steps to protect your financial well-being and secure your future.

Health and Dental Benefits

When you leave a job, you lose your group health and dental coverage, but you have options to maintain protection:

1. If your spouse has a plan:

• Opt back into their benefits plan or update the benefits provider to stop coordinating coverage.

2. If you don’t have a spouse’s plan:

• Option 1: Buy standard private health insurance. It’s more affordable but excludes pre-existing conditions.
• Option 2: Purchase a "roll-over" plan to maintain coverage for existing health conditions. It will cost more and offer limited coverage but can protect you from gaps.
• Remember, you don’t need to stick with your group provider for private insurance. Most companies give you 30–60 days to enroll in their individual products.

Disability Insurance

Your group disability insurance will lapse when you leave your job. Unfortunately, there’s usually no roll-over option. To stay covered, consider private disability insurance or critical illness insurance to safeguard your income.

Life Insurance

You may be able to convert your group life insurance to a private plan with the same provider (typically up to $200,000 without medical questions). While convenient, guaranteed-issue life insurance is often expensive and lower quality. If you’re in good health, shop for an underwritten policy through a broker for better coverage at lower rates.

Workplace Investment or Retirement Plans

Group RRSP or Defined Contribution Pension Plans

Leaving your group investment plan means losing two key advantages—lower fees and employer match contributions. Here’s what you need to know:

• Group RRSPs transfer to private RRSPs held with the same provider, while Defined Contribution Pension Plans convert to a private locked-in plan.
• These plans typically carry high fees without providing advice. Act quickly to move your investments to either:
• A self-directed platform with lower fees, or
• A Certified Financial Planner (CFP) who can manage it for competitive fees and expert guidance.

Defined Benefit Pension Plan

If your employer offers a commutation option, you could either:

• Take a lump-sum payout to invest yourself, or
• Opt for lifetime pension payments.

This decision can be complex, involving factors like survivor benefits, inheritance, and indexing. Consult a professional to weigh your options.

Managing Severance and Taxes

Understanding Severance Pay

Your severance is taxable in the year you receive it. Be aware that the withholding tax your employer deducts is only an estimate, and you may owe more come tax time if it pushes you into a higher tax bracket.

Strategies to Reduce Your Tax Bill

1. Ask for delayed severance payment if possible, shifting some income to the next tax year to lower your taxable amount.
2. Contribute to your RRSP to offset the tax burden. Don’t forget to check if your spouse has RRSP room that you can use as well.

For example, if you earn $100,000 and receive a $200,000 severance, you could owe close to $97,000 in taxes. Shifting some income to a later year or adding to your RRSP could save you thousands.

Employee Stock Plans

Vested vs. Unvested Shares

• You own vested shares outright and can sell or hold them as you choose.
• Unvested shares often return to the employer when you leave, but don’t make assumptions—some companies may vest your unvested shares in goodwill. Always ask!

For quarterly purchase plans, ensure contributions are either awarded as stock or refunded to you. Once you have the shares, consider selling them for safer investments, especially while transitioning careers.

Tips to Safeguard Yourself in the Future

It’s never too late to plan for unexpected changes in employment. Here’s how to stay prepared:

• Get a Home Equity Line of Credit (HELOC): Lock in the maximum credit now while you have income. You’ll be glad you did if the need arises later.
• Set up an Emergency Fund: Aim for 6 months’ worth of expenses in a High-Interest Savings Account. It’s your safety net for uncertain times.

Final Advice

Navigating the loss of employer-sponsored benefits and financial perks might feel daunting, but it also provides an opportunity to put yourself in a stronger position moving forward.

Consulting with one of our friendly advisors can help ensure you make informed decisions tailored to your needs. Discover a personalized, done-for-you approach to managing your money— and building wealth.

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