How to survive financially after being laid off

Amazon and UPS have recently announced tens of thousands of layoffs, and some economists predict more to come. Major companies have started cutting jobs after the pandemic, after holding on to staff due to concerns about labor shortages. Now, as the economy slows, costs rise and artificial intelligence (AI) makes companies more efficient, companies are cutting back on perceived fattening.

Experts say losing your job can be traumatic, but it doesn’t have to be a financial ruin. Experts say staying calm and taking the necessary steps quickly to protect yourself and your finances will help you survive until you can find another job.

“Suddenly losing half of our household income…was terrifying,” Chris Sherman, a laid-off product manager, wrote on his blog. “My wife and I live in Seattle, and with two kids and two mortgages, our monthly expenses are high. Fortunately, we started our life together with very little income, so we were able to develop good financial habits early on. We were able to weather this transition without major financial damage.”

How do you survive a layoff?

Here are some tips from experts.

• Examine the pink slip. Employers cannot require you to sign a resignation document before you are allowed to resign, nor can they withhold your pay for not signing it. Therefore, you can take the time to review the terms and possibly negotiate items such as retirement benefits, health insurance, stock options, and referral services to help you find another job. All workers have protections, and employees age 40 and older have additional protections under the Older Workers Benefits Protection Act (OWBPA). To release a company from age discrimination claims, it must give older workers at least 21 days to consider offers and seven days to revoke individual termination signatures, among other provisions. In the case of collective redundancy, employees must be given 45 days to consider a severance agreement.
• get a recommendation. Ask a manager or someone at the company you had a good relationship with for a reference letter or if they can be a reference in the future. Be sure to exchange contact information before departure.
• plan your health insurance. Businesses with 20 or more employees typically offer continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), which covers you and your family for up to 18 months. But COBRA isn’t cheap, and you may need to pay full premiums, up to 102% of the plan cost, according to the Centers for Medicare and Medicaid Services. If possible, it may be cheaper to transfer to your spouse’s workplace health insurance. You can also check out Affordable Care Act plans on the Health Insurance Marketplace.
• Check your finances.
  • Apply for unemployment insurance (UI) benefits now. Requirements vary by state, with some states requiring a one-week waiting period before being eligible for payments. Check out the Department of Labor’s website, Unemployment Benefits Finder | Visit CareerOneStop to learn how to apply for UI in your state.
  • See if there are any sources of income readily available. This includes emergency funds and loans from friends and family. According to a 2023 Quicken survey of 865 adults, one in three people who have not been laid off have given, gifted or lent money to someone who has been adversely affected by a layoff or the current economic climate. Their generosity begins with their families. Because people are most likely to donate to siblings (81%), their spouses (79%), their children (76%), and parents (75%).
  • Cut back on expenses you can live without, at least temporarily, such as takeout meals, subscription services, and memberships.
  • Don’t forget your 401(k)“If you’re fired, neither you nor your employer will contribute to your 401(k),” says Samuel Everts, a financial advisor at retirement planning firm Dugan Brown. “Consider taking ownership of your retirement savings by moving your 401(k) funds into a Roth IRA.” In some cases, you can leave your 401(k) with your company, but “you can’t make contributions and you’ll still be subject to management fees.” Cash out only as a last resort, he said.
• Update your resume. Add new skills and experience at the top, using language that targets the specific role you’re considering for your next job. Online AI tools like Wisedoc resume builder can help. Don’t forget about your LinkedIn profile, cover letter template, and portfolio. Consider expanding your skills by taking free and inexpensive upskilling courses, such as Google’s Career Certificate.
• Apply for a job. Start with the company you want to work for and the job you are qualified for. Tap into hidden job markets by reaching out directly to recruiters and decision makers to share what you can offer their company.
• Please consult an expert. If you still feel overwhelmed, consider talking to a professional for resume, financial, and emotional support. Empower Work, a national nonprofit organization in the United States, connects individuals facing work-related challenges with trained peer counselors who provide free, confidential, text-based support.