By George Erb
The Seattle Times
WWR Article Summary (tl;dr) Americans have a mixed record when it comes to savings. In a survey of American families last year, one third of the respondents told The Pew Charitable Trust that they had no savings. This is one Seattle woman’s story.
SEATTLE
Terri Tidwell is hoping for some continuity after getting laid off twice, losing her health insurance twice and getting married, all this year.
She has survived her job losses by relying on a severance package and unemployment insurance. Some personal-finance tips that she learned years ago from her grandfather also served her well.
The 57-year-old Seattle-area resident is now heading into 2017 with a new job, a new husband and a new financial plan designed to carry her to a secure retirement.
Tidwell’s trials began in 2015, when her longtime employer, QBE Insurance Group, gave her an advance layoff notice at the global company’s Seattle-area office, which was shedding employees because of consolidation. She had worked for years in the accounts-receivable department.
Her layoff date was postponed twice. But Tidwell’s 32-year career with the insurer ended April 29, when she carried her personal belongings out of a depopulated office.
“There was hardly anybody left to say goodbye to,” she said.
The company gave her a lump-sum severance of about $48,000, the equivalent of a year’s salary. Tidwell put the money in the bank and signed up for unemployment insurance, about $597 a week after taxes.
Then she spent two weeks relaxing with friends in California. After resting and recharging, Tidwell came home and started looking for work.
Her circumstances were nerve-racking, but she had cash flow from the unemployment insurance as well as some accumulated assets.
Tidwell and her former husband in 1990 bought a house for $116,000, and in 2003 she became the sole owner with the divorce settlement, records show.
She refinanced in 2015, lowering her interest rate to 3.75 percent from 4.86 percent. At the same time, Tidwell rolled other debts into the mortgage, such as an $18,000 roof replacement and the remaining debt from earning an associate degree.
She owes about $192,000 on the mortgage, but the property now has an estimated market value of about $312,000, according to Zillow.
Over the course of her career, Tidwell took advantage of her employer’s retirement savings programs. She rolled over $180,600 from her former workplace 401(k) into an individual retirement account, and she had $111,800 more in a pension account.
Her retirement savings were inspired by her grandfather’s exhortations years ago. He made his grandchildren count coins and gave them savings bonds for the holidays. His mantra was, “Save your money. Save your money,” Tidwell said.
“It was always drilled into me to save for the future.”
Americans have a mixed record when it comes to savings. In a survey of American families last year, one third of the respondents told The Pew Charitable Trust that they had no savings. A separate household survey by the Federal Reserve in 2015 found that only 47 percent of respondents had an emergency fund large enough to cover three months of household expenses.
Tidwell had about $9,000 in two household accounts when she was laid off. By summer, she had about $38,700 in various accounts because of her severance.
After she was let go, Tidwell also had about $205,000 in debt. More than 90 percent of it was the mortgage, however; the rest was about $12,300 in credit-card balances.
In the spring, with her layoff looming, Tidwell asked for help with managing her money and preparing for the future. The Financial Planning Association of Puget Sound put her in touch with Seattle-area financial adviser Tom Zebroski.
“I really appreciated how responsible she is with her money,” Zebroski said. “Most people don’t have their arms around their financial situation.”
For example, when Tidwell got a mailer from Chase Bank offering cash incentives for opening new accounts, she jumped on it.
She got $200 for putting money into a new savings account and $300 more for opening a new checking account. She ended up earning $500 on money she planned to keep in a bank anyway.
“Brilliant,” Zebroski said.
Tidwell also rolled over her credit-card debt to a new U.S. Bank account with a teaser interest rate of zero until December 2017. Her plan is to start making payments when her employment stabilizes.
Health insurance has been a real challenge. She looked into staying on her employer’s insurance plan after her layoff, but the $900-a-month premium for Tidwell and her fiance was unaffordable.
In June, Tidwell landed a temporary job with health-care benefits at an startup. But her paycheck and health insurance disappeared in mid-September, when she was laid off again.
Zebroski urged Tidwell to put a priority on getting health insurance.
“The consequences of her falling ill and losing everything are too severe,” he said. “She absolutely can’t be without health-care coverage.”
On Nov. 1, Tidwell married her fiance, Pat Dunlop, in a budget-conscious ceremony. Six days later, she started a new job in the accounts-receivable department at Markham & Associates, an area company that designs and installs window coverings and solar control systems. The position pays about $45,700 a year and comes with health benefits.
The couple are now living at Tidwell’s house. All the children from their previous marriages are independent adults living away from home.
For the moment, their finances are separate. But Zebroski advised Tidwell and Dunlop to update their wills and begin talking about joint finances and shared goals, such as retirement.
He said Tidwell should also re-examine where the money is invested in her IRA, which is with California-based Cetera Advisor Networks. He believes she would be better served by a wider mix of securities.
As for Tidwell’s pension, Zebroski noted that its value would not increase if she left the money under the control of QBE.
Instead, he advised her to take a lump-sum payment of $111,800 and roll it into an IRA. Then she could invest the money and potentially double its value in 10 years.
Zebroski also urged Tidwell to replenish her emergency fund when she went back to work. As it turned out, her absence from the workforce didn’t last long.
On a recent Sunday afternoon earlier this month, Tidwell sat in a coffee shop and mused about going to her first day on the job. It was the very next day.
“It’ll be nice to have a place to go,” she said.
