Resources available to replace lost income during a crisis

Major disasters can seriously impact your cash flow. Here are four options for dealing with lost income.

Between emergency expenses and lost wages, major disasters can seriously impact your cash flow. While it is generally recommended building an emergency fund of at least 3 to 6 months' worth of expenses, you may not have that much — or you may find that's not enough to cover your needs.

Additional options for dealing with lost income include:

• Unemployment assistance. If your employment—or somebody else’s in your household—is interrupted or ended because of the current crisis, you may be eligible for unemployment benefits or other disaster assistance programs in your country. Some countries may also have mandatory severance benefits if your employment has been ended, in which case you may want to check your eligibility for these benefits with your employer. The support provided by governments and companies can vary significantly by country or region—while some governments can support paying for a portion of employees’ base salaries for a short term, others may be limited to tax breaks, one-time payments or an extension on tax payment deadlines.


• Disaster relief programs and emergency grants. Individuals in some countries may be eligible for disaster relief grants to help pay for food, utilities, medical bills, cleanup, and other costs not covered by insurance. Some programs may also offer low-interest loans to help homeowners and renters recover from disasters for lost and damaged property that's also not covered by insurance. Other countries are also offering short-term tax relief programs and benefits targeted only for those directly impacted by the crisis.


• Retirement plan loans and hardship withdrawals. If you have an individual retirement account through the government, a private vendor or through your employer, some options may be available to you. While some retirement plans may already allow the withdrawal of funds from your individual retirement account, typically some thresholds and penalties may apply. To support those impacted by a crisis, some governments may temporarily waive penalties or increase those thresholds. Alternatively, some individuals may also have the option to take a loan from their retirement account to cover losses that aren't covered by insurance, savings, or other relief funds.


• Stimulus aid and incentives for small business. Countries may institute short-term relief programs to help small businesses impacted by a crisis, such as happened around the globe during the COVID-19 pandemic. These programs can vary and may include low-interest rate loans, emergency grants, tax relief programs, and other options.

The key takeaway here is to do your research to see what may be available to you where you live and based on your circumstances. There may be help available to you that you had not anticipated. Programs may change in response to circumstances, so it may be worth checking again if you looked at some options previously.