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1. Take a monetary stock
Among the primary issues to do if you happen to lose your job is take inventory of monetary sources at your disposal, in keeping with monetary advisors.
Those could embrace different streams of revenue akin to a associate’s wage, in addition to emergency financial savings, firm inventory and monetary accounts together with a 401(okay) or particular person retirement account (extra on this in a bit).
Your sources may embrace firm advantages like severance pay or cashing out unused go away like trip and sick days. Workers also needs to test to see if they will proceed receiving advantages like company-sponsored well being and life insurance coverage.
Households also needs to replace their budgets to get a way of present spending and the way that might be adjusted with out your paycheck.
“You want to get clarity,” mentioned monetary advisor Winnie Sun, co-founder of Sun Group Wealth Partners in Irvine, California, and a member of CNBC’s Advisor Council. “We all think we don’t spend that much.
“But most of us in all probability do.”
These factors — your budget and money stash — will help dictate your timeline for finding a new job.
2. Apply for unemployment insurance
Unemployment insurance may also factor into your cash flow.
Benefit amount and duration vary widely among states and also depend on factors like your earnings and work history. The average person collected about $363 a week over the 12 months through April 2022, according to the U.S. Department of Labor.
Workers should apply right away (generally online or by phone) after a layoff, even if they think they’re not eligible, Nightingale said.
Applicants generally submit a claim for benefits in the state where they worked, according to the Labor Department. You can consult the DOL’s state directory or CareerOneStop.org for agency contact and application information.
Further, be prepared with relevant information like employment records for about the past two years, Nightingale said.
“Don’t simply decide up the cellphone and say, ‘I used to be working at XYZ Company,’ since you want greater than that to use,” she said.
You may not be immediately eligible for unemployment insurance if you’re receiving severance pay. But you may be eligible for full or partial benefits depending on your individual circumstance and state rules. If you’re deemed ineligible, file a new claim once severance pay stops.
3. Negotiate your exit
There may be some wiggle room to negotiate on severance and other company benefits, Sun said. (Not all businesses offer severance, though.)
If you are in good standing with your company, ask your manager if you can get a few extra months of severance pay, and an associated extension to medical and dental benefits.
Or, similarly, ask if you can extend your employment (and delay the layoff) by a few months. This becomes especially important if you’re close to being — but aren’t yet — fully vested in benefits like a 401(k) match or company stock, Sun said.
There may also be room to negotiate staying on part-time or as a freelancer — which may be particularly important for workers closer to retirement age who aren’t confident they’ll be able to find another job quickly, Sun said.
“At this level, what is the worst factor that’ll occur to you?” Sun said. “Typically, those that attempt get one thing.”
4. Figure out which assets to tap, in what order
Knowing where to draw money from can be a delicate balancing act, due to potential tax consequences.
If you need to pull from financial accounts, cash from an emergency fund — if you have one — will generally be your first choice, according to financial advisors.
Savers with Roth IRAs can typically withdraw their account contributions tax- and penalty-free. (That’s not true of investment earnings, though. Some limitations may also apply to pre-tax IRA contributions that were subsequently converted to Roth IRA funds.)
Roth 401(k) accountholders can also pull out money tax- and penalty-free, under two conditions: The owner must be over 59½ years old and made a contribution at least five tax years ago.
Those with long-term investments (held for more than a year) in taxable brokerage accounts can sell them for income at a preferential tax rate.
Tax-deferred accounts like a pre-tax 401(k) or IRA should generally be a last resort, according to Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management, based in Washington.
Workers would owe income tax on that distribution, and those under age 59½ would pay an additional penalty. One exception: The “Rule of 55” allows a laid-off worker who’s at least 55 years old to withdraw 401(k) funds without that 10% early-withdrawal penalty.
“You could also be somebody who at all times mentioned, ‘I’ll by no means withdraw these retirement contributions,'” said Kevin Mahoney, CFP, founder and CEO of Illumint, based in Washington. “But below sure circumstances, that is probably the most prudent transfer to make.”
5. Network and construct job abilities
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It’s a given you should update your resume when looking for a new job. But make sure you have different versions depending on the type of job you want, since targeting will help you stand out, Nightingale said.
Leverage your personal and professional networks to find opportunities — perhaps a union membership, professional association, business contacts, former colleagues, and friends and relatives. Connect with people on LinkedIn and ask for public endorsements, Sun said.
Further, local job services offices offer free employment and training resources. There are about 2,500 offices around the country, Nightingale said. You can find a local office and other job resources at CareerOneStop.org.
Those with free time may wish to get a certificate or acquire a new professional skill, said Johnson, a member of CNBC’s Advisor Council.
“Use your time properly,” he said. “It exhibits employers you were not simply sitting round, you have been attempting to get higher.”
6. Take a deep breath
Lastly, don’t be too hard on yourself. Recognize that layoffs are often due to factors beyond an individual’s control instead of a personal failure.
Take a deep breath. Use your available time to step back and reflect on your career — what’s important to you? Would you like to try something new?
“Life is a long-term race, not a dash,” Johnson said. “Sometimes it is actually a blessing to get laid off” regardless that it might not appear that method proper now, he added.