Layoffs Are Rising — Here’s How to Protect Yourself and Your Finances
Job cuts are growing more widespread, meaning more people are either losing their jobs or know someone who has.
Companies like Amazon and UPS have announced layoffs affecting tens of thousands of workers. Economists warn more could follow. Many businesses that previously held onto employees during the pandemic to avoid labor shortages are now cutting staff due to slowing economic growth, rising costs, and advances in artificial intelligence that make operations more efficient. Employers say these cuts are necessary to eliminate excess spending.
Losing a job can be emotionally and financially overwhelming, but experts say it doesn’t have to lead to financial ruin. Staying calm and acting quickly to secure your financial situation can make all the difference.
Chris Sherman, a product manager who was laid off, described the experience as frightening. “Suddenly losing half of our household income was…terrifying,” he wrote. Living in Seattle with his wife, two kids, and two mortgages, he said their strong financial habits helped them manage without serious financial harm.
What to Do If You’re Laid Off
Experts recommend the following steps:
1. Review Severance Documents Carefully
You don’t have to sign exit paperwork immediately, nor can your employer withhold your paycheck if you don’t sign. Take time to read everything and consider negotiating severance pay, continued health coverage, stock options, or outplacement services.
Workers age 40 and older have additional protections under the Older Workers Benefit Protection Act. For individual layoffs, they must be given at least 21 days to review an agreement and 7 days to revoke after signing; for group layoffs, they get 45 days to consider.
2. Ask for a Reference
Before leaving, request a recommendation letter or ask a former supervisor if they’re willing to act as a professional reference. Make sure you exchange personal contact information.
3. Sort Out Health Insurance
If your company has 20+ employees, you may qualify for COBRA, which allows you to keep your employer health coverage for up to 18 months. However, it can be expensive—you may be required to pay the full premium plus 2%. Switching to a spouse’s plan or exploring Affordable Care Act insurance options may be more affordable.
4. Assess Your Finances
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Apply for unemployment benefits right away. Rules vary by state, and some require a waiting week before payments begin. Visit the Department of Labor’s Unemployment Benefits Finder to get started.
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Check available cash sources like emergency savings or support from family or friends. According to a 2023 survey by Quicken, many Americans have helped loved ones affected by layoffs—most often siblings, spouses, children, or parents.
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Cut back on non-essential spending, such as dining out, subscriptions, or memberships.
5. Manage Your Retirement Accounts
Once you’re laid off, your 401(k) contributions stop. Financial adviser Samuel Eberts suggests considering a rollover of your 401(k) into an IRA or Roth IRA to take ownership of your retirement funds. You can sometimes leave the money in your former employer’s plan, but you won’t be able to add to it and fees may still apply. Cashing out should be a last resort.
6. Update Your Resume and Online Profiles
Refresh your resume with your most recent experience and tailor it for jobs you’re targeting. Use tools like AI-based resume builders if helpful. Don’t forget your LinkedIn profile, cover letter, and portfolio. Consider taking free or affordable courses, such as Google Career Certificates, to strengthen your skills.
7. Start Applying Strategically
Begin with roles and companies that interest you and match your qualifications. Reach out directly to hiring managers or company leaders to tap into the hidden job market.
8. Seek Professional Help if Needed
If you’re feeling overwhelmed, consider reaching out to professionals for resume advice, financial guidance, or emotional support. Nonprofits like Empower Work offer free, confidential text-based counseling from trained peer specialists.
Bonus: After You Land a New Job
Once you’re employed again, revisit your retirement savings. “Think about consolidating your 401(k) accounts,” Eberts advises. Having your investments in one place makes tracking performance easier and could help you reach your financial goals faster.
