How to Prepare for and Manage Through a Job Loss

Losing a job can be one of the most stressful and uncertain experiences in life. The emotional toll—ranging from confusion to frustration to anxiety—can make it difficult to think clearly about your next steps. That’s why having a plan in place is so important. By taking a number of proactive steps, you can safeguard your financial well-being, protect your benefits, and set yourself up for success in finding your next opportunity.

Signs You May Be at Risk for Job Loss

While some job losses happen unexpectedly, there are often warning signs that may indicate your position is in jeopardy. These include:

• Company-wide layoffs or restructuring rumors
• A decline in company performance or profitability
• Budget cuts affecting your department
• A shift in leadership with new strategic direction
• Your role being gradually reduced or reassigned
• A lack of new projects or responsibilities coming your way
• Changes in company culture or communication patterns

A Checklist to Improve Your Financial and Professional Outlook

If you notice these signs, or currently experienced a job loss, here’s a checklist of proactive steps you can take to help prepare yourself and mitigate the impact:

Health Insurance Considerations

• Review the different options you may have for continued health insurance:
  • If your spouse or partner is working, one of the easiest (and often lowest cost options) is to join their plan if you have access to it.
  • Another option if you qualify for it is COBRA (coverage under the Consolidated Omnibus Budget Reconciliation Act). COBRA enables you to keep your employer’s health coverage, generally for 18 months, but may require you to pick up more of the cost. See usa.gov/cobra-health-insurance.
  • Also check private insurance plans, as well as options through the public marketplace at HealthCare.gov.
  • If you have access to a high deductible plan with a Health Savings Account (HSA), another possibility is to use your tax-deductible contributions to help cover out-of-pocket medical expenses, like your COBRA premiums.
  • If you have dependents, ensure their coverage remains uninterrupted. Keep in mind that college students may have access to a health plan offered through their school.
  • While adult children can remain on your plan until 26, if they are working and have access to an employer insurance plan, this may be the right time for them to enroll.
• Before deciding, always compare the costs, benefits, and your medical needs to see which option best suits you and your family.

Retirement and Financial Planning

• Review your employer-sponsored retirement plan options (401(k) and related tax-deferred plans). Can you leave funds in your current plan? If not, consider rolling them over to an IRA if you’re no longer covered by an employer plan.
• If you have an outstanding loan from your employer plan, understand the rules and implications of paying it back after leaving your job, and think carefully about taking a loan out before departing.
• Assess the impact of job loss on your long-term financial goals and adjust as needed.
• Evaluate your emergency savings—how long can it cover essential expenses?
• Review your expenses and separate needs from wants to stretch your financial resources (various tools and worksheets can help you with these estimates, including a very comprehensive one from Edelman Financial Engines).
• Review your tax withholding and make any necessary adjustments.

Unemployment and Severance

• Research state-specific unemployment benefits and eligibility requirements to understand the application process.
• If offered a severance package, review the details carefully, including taxation implications. Consulting a professional for legal and tax advice may help maximize its value.

Employer-Sponsored Benefits That May End

• Identify any company perks you currently use, such as gym memberships, cell phone discounts, or car allowances, and budget accordingly.
• Determine if your group life insurance policy is portable—can you continue coverage, how much will it cost, or do you need a new policy? Review the costs and determine if you are better off purchasing a private policy.
• Employer group disability benefits are not portable. So, make sure to review any disability insurance coverage that was provided and determine whether you need a new policy.
• If you have a Flexible Spending Account (FSA), use the remaining funds before they expire at year’s end.

Professional and Career Preparation

• Update your resume with your most recent accomplishments and responsibilities.
• Request a letter of recommendation from your employer or trusted colleagues before you leave.
• Confirm professional contact information with close colleagues to maintain your network.
• Update, review, and refine your LinkedIn profile to reflect your experience and career goals.

Moving Forward with Confidence

While job loss can be unsettling, understanding what steps to take can help you navigate the transition with greater confidence. By taking control of your finances, benefits, and professional network now, you’ll be in a stronger position to move forward toward your next opportunity.

If you’d like personalized financial guidance during this transition, Edelman Financial Engines is here to help. Our advisors can help you assess your financial situation and create a plan tailored to your needs. Give us a call today.