How to Navigate an Unexpected Job Loss

Experiencing sudden unemployment can be a seismic event, shaking your financial — and sometimes emotional — stability. It’s crucial to navigate the aftermath of a job loss with clarity and resilience. Here are some tips to help you move forward after losing your job:

Breathe. Recognize you may be in shock. Whether you were fired or laid off, allow yourself time to process your loss and grieve, connect with friends, journal, exercise or meditate.

Understand your severance options. Some companies provide a lump sum severance or continuation of salary for a period after a layoff, though this isn’t mandatory. It is essential to read and comprehend these terms and conditions before signing any severance agreement. Take note of the amount and date of payment as well as whether there is an option to contribute to your 401(k) or any other employee benefits. Severance agreements can be complex, so consider seeking the advice of a qualified employment attorney for an independent review.

Stay organized post-layoff. You will likely lose access to your workplace-issued technology. Collaborate with your former company to gather crucial paperwork or contact information you might need in the future. This could include stock incentive documents, retirement plan information and copies of your performance reviews.

Explore unemployment benefits. Determine if you qualify for unemployment benefits and how to apply for them. Keep in mind that some states may not allow you to receive unemployment pay while receiving a severance payment. While unemployment benefits may only replace a fraction of your salary, it is important to apply quickly if you are eligible.

Determine a plan for healthcare insurance. After the end of workplace coverage, you may need to find replacement health insurance. Common options include enrolling in COBRA, shopping the HealthCare.gov Marketplace or joining your spouse’s health plan. To maintain continuous coverage, you generally have 30 days after a qualifying life event, such as a layoff, to enroll in a new plan and 60 days to make a COBRA election.

TIP: If you have a Health Savings Account (HSA), that money is yours to keep. However, unused dollars in a Flexible Spending Account (FSA) will be lost upon unemployment. Determine the deadline to submit eligible medical expenses already incurred to receive reimbursement from your FSA.

Understand your life insurance options. If your immediate family or extended loved ones rely on you, do not overlook the importance of continuing your life insurance protection. Determine if your policy is portable for a limited period or convertible to an individual policy you can maintain for a longer term.

Determine the cost to operate your life:

• Make a list of your essential and nonessential expenses incurred monthly, quarterly, semi-annually or annually.
• Estimate variable expenses such as food, gas, utilities, etc.
• Immediately pause or cancel nonessential subscription services.
• Evaluate opportunities to generate supplemental income.

After completing this exercise, you will gain clarity on how much it costs to operate your life each month. From there, you can create a budget and identify opportunities to help maximize your severance pay or savings as you seek new employment.

TIP: Review any loan documents you have or contact your financial institution to determine if you have any loan payment protection that might temporally pause credit card, automobile or other payments during unemployment. If you or your child are enrolled in college, notify the Financial Aid Office to communicate a significant change in household income. If you are out of school and making federal student loan payments, you may be eligible for deferment while you are unemployed for up to three years.

Keep a routine. A layoff can be a challenging time. Remember the importance of a positive mindset and incorporate activities that lift your mood. In addition to applying for jobs or working on a certificate or course to refresh your skills, take breaks to walk, see friends or family, or spend time doing things you enjoy.

Begin your job search. Take advantage of any outplacement services your former employer offers, such as resume writing or recruiter resources. Connect with your alma mater for career counseling support. Ensure that your LinkedIn profile is up-to-date and reach out to connections in your network.

Be patient. Finding the right job takes time, often much longer than expected. Consider temporary or contract income that can alleviate pressure on your severance or savings while you seek longer-term employment.

Find support. A CFP® professional can help you evaluate your finances after a layoff and craft a plan to keep your financial goals on track. Find your CFP® professional today.