Adulting 101 - You Got Laid Off – Now What?

Losing your job is stressful in any situation. Being told you’re losing your job through no fault of your own during a global pandemic and a recession, however, can bring on additional feelings of panic. Layoffs bring concerns of running out of money to pay for the essentials like groceries, rent, mortgage payments, or utilities, which are frightening. In the moment, it can be hard to imagine how life will go on or figure out what your next steps should be. If you have been laid off or feel as though it is imminent, I suggest you treat the unfortunate situation like any other difficult situation in life and take it one step at a time. Use the following steps to lay out your to-do list and be sure you’re taking advantage of all your available resources.

1)    If you haven’t already received a layoff notice, but you feel it is impending, your best first step is to start hoarding cash, especially if you don’t have an emergency fund stashed away. Stop all non-essential spending and start a budget to keep yourself on track.

2)    Talk to your boss or your company’s human resources department about severance pay. If this benefit is offered, it’s usually based on the length of time you were employed by your company. If not offered, inquire if your unused sick or vacation time will be paid out. Find out how these things will be paid out (lump sum or over time) and ask for an estimate of your upcoming paychecks so you can plan a budget and be ready when filing for unemployment benefits.

3)    While you’re at it, ask about severance benefits like health insurance or outplacement services. If they don’t offer health coverage as part of your severance package, you’ll need to compare the cost of COBRA (paying on your own to continue your employer’s medical insurance coverage) to getting your own health insurance plan on the marketplace. Some employers may also offer assistance with searching for a new job after you’ve been laid off. This is rare, but it does exist.

4)    Don’t be too proud to ask for help when you need it. Ask your boss for a letter of reference you can use in your job search. File for unemployment benefits. While you’re waiting for unemployment benefits, reach out to creditors like your mortgage and utility companies to let them know what’s going on. Most won’t advertise it, but they likely have some type of assistance program to help reduce or defer your payments. If you don’t have money for food, reach out to local organizations like community centers, religious organizations or food banks for help. They’re there to lend a helping, non-judgmental hand.

5)    Map out a plan to start applying for new jobs. This time may be a good opportunity to reflect on what you really want out of your career and whether it’s time to change industries. If you’re considering a career change, know that you’ll likely take some type of a pay cut to get started somewhere new. Tailor your resume and cover letter to each individual company so you can match your experience to what they’re seeking. Highlight your transferrable skills.

6) Keep track of your retirement plan account. If you’ve been saving in an employer’s 401k or 403b plan, call to find out whether you can leave the plan where it is or if you’ll need to rollover to an IRA account. If you’re leaving it there, inquire about any account service fees for doing so. If you’ll be rolling it over, find a firm that doesn’t charge any maintenance fees on your account. Then, be sure to have a plan to reinvest those funds once the cash has been deposited. Don’t let it just sit in cash, as you could miss out on some great growth in the stock market.

-Margaret Gooley, CFP®, Worley Erhart-Graves Financial Advisors