How You Can Survive And Thrive During A Layoff
You’re worried that you’re going to be laid off! Now what? First, know you are not alone. More than 24,000 tech workers across 72 companies have been laid off last quarter – not exactly a way to add joy to the holidays.
401k, stock options, vacation pay, what else?
I have some advice on important steps to take; even before you get that dreaded notice.
Get organized – As soon as you suspect that a layoff is in the picture, start analyzing your finances, medical needs and personal belongings. That includes looking at your spending to see how you can cut back. If you don’t already follow a budget, you can get started with the guide on our website. Start socking money into an emergency fund to tide you over until you find a new job.
Understand your benefits – Collect all pertinent phone numbers, including your 401(k) provider, pension provider, retiree insurance HR contact, reference letters and possible job contacts. Familiarize yourself with your state’s unemployment laws and file as soon as you are laid off.
If possible, get a letter explaining you were laid off because of cutbacks so a potential employer will know it was not your fault. Tap unused benefits, including unused vacation and sick pay, if possible. If you have a flexible spending account, try to use the funds before you lose your job.
Examine your severance package – Employers are not required by federal law to offer severance but if they do, they can often be negotiated. If your employer doesn’t offer outplacement support to help with finding a new job, check at local associations and community and government organizations for resources. Each state has American Job Centers, where you can find assistance.
Know your health care options – Consider whether you can be added to your spouse’s health insurance plan. Once you’ve been terminated, you can continue your health insurance under COBRA which lets you stay on your employer’s plan for up to 18 months, but it’s usually quite expensive as you are responsible for paying the full premium. A better option might be to choose a plan under the federal Affordable Care Act. Each state has an exchange where you can shop for coverage.
Get ready for the job hunt – Update your resume, LinkedIn profile and cover letter. Make a list of former colleagues and bosses you’ve lost contact with and reach out to them. Ask colleagues and work friends to give you leads on other jobs.
Decide – carefully – what to do about your 401(k) — You have a few options in choosing what to do about the retirement savings nest egg you have amassed while you were employed. You can leave all or part of your savings in the plan of your soon-to-be-former employer; you can roll over the funds into an IRA’ you can withdraw the funds. but withdraw them ONLY as a last resort and not without consulting your financial advisor!
Things to consider when deciding about your 401(k) — What are the fees and expenses of your employers’ plans compared with others? Are there higher administrative fees for former employees? What are the investment options of an IRA compared with a typical company-offered 401(k) plan?
Doing a rollover of your funds likely would make it easier for you to manage and keep track of the funds and give you added flexibility. Also look at the plan’s rules about withdrawals.