Welcome to the second edition of Jobtober! The little tiny pumpkins are taking over your grocery store window display, and for many of us…it’s OPEN ENROLLMENT season! In this five-part series, we’ll explore how to make your job work for you and how to improve your life at work (well, at least the financial part of it). Last week, we covered how to maximize employee benefits, and this week, we’re talking about layoffs.
Key takeaways:
A layoff feels like the apocalypse, but it doesn’t have to be.
Building up an emergency fund was made for this exact moment to give you a little cushion while figuring out your next move.
Before you leave your company, make sure that you’re leaving with as much money in your pocket as possible and few headaches.
Getting laid off feels like a gut punch. Even if you saw it coming, even if the headlines portended it, it’s still brutal. Maybe you’re one of those people who has survived multiple rounds of layoffs and then suddenly one day it happens to you. Twitter, Google, Meta, Amazon, Zoom—tech giants shed employees quarterly when the budgets don’t work, sometimes hiring the same people back months later. It can feel like whiplash to be a modern worker, so strap in. Behind every “restructuring memo” is a real person staring at their laptop, refreshing LinkedIn, wondering how long their savings will last.
I felt this acutely when a good friend who happens to be a client texted me in May to say she had been laid off. Reading her words, I could feel the sadness, fear, and disappointment between the lines. I shot back: I’m so sorry. Minor setback though, that’s what the emergency fund is for. Still, it’s ugly to be laid off, especially when it’s done in that abrupt way. Sorry, you can’t access any of your files, HR will “be in touch.” It’s cold and it makes you feel disposable. It makes you feel like that project you’ve been working on for months was meaningless. It’s demoralizing at best and nihilistic at worst. What’s the point of it all?
After the initial state of sadness and shock, my friend soon learned that she had a generous severance and was given health insurance coverage for a few months, which was helpful. She even tried to hold onto her next Restricted Stock Unit (RSU) vest so she would receive more compensation…but ultimately wasn’t successful. But even with the severance payout and health insurance, she was still worried about spending down the emergency fund she’d saved so diligently. But that’s exactly what it’s there for. To buy yourself some time and to give you some breathing room. We had set our emergency fund target at four months of living expenses to plan for this EXACT moment. This is the emergency we’ve been training for (which, due to the severance package of thee months of salary, ended up not being too much of an emergency after all). A layoff is your emergency fund’s time to shine. It’s saying, “Put me in, coach, I’m ready!”
So this friend ended up taking a real month off. She traveled a bit and then settled into the grueling job hunt. At first, she told me it was bleak. She found postings for jobs that seemed like a perfect fit, only to apply and hear nothing. Then her network kicked in and replies started coming in. Two months later, she had two great offers. I saw her at a party recently and she couldn’t wait to tell me about the one she’d accepted. Her excitement was contagious. Honestly, I felt like I’d gotten the job too. And then she said something that stuck with me: it had been the best summer of her adult life. That’s the paradox. A layoff can feel like the end of the world, but with a little cushion, it can just be a temporary blip in an otherwise fabulous year.
If you have some time, consider picking up the novel "Severance" by Ling Ma (not the HBO show, although both are about dystopian workplaces). It’s a darkly funny meditation on modern work and the absurdity of tying your entire identity to your job. I highly recommend reading it while you’re technically “between opportunities.”
So, yes, if you get laid off, you’re allowed to wallow for a bit. But then it’s time to act.
1. Face the Reality of Your Savings
If you don’t have an emergency fund, welcome to the crash course. It’s time to cancel the subscription boxes, stop paying for apps you don’t use, and maybe learn to cook again. A temporary period of cutting back may be necessary if you don’t have a cushion. Cash preservation is the goal.
2. Deal with Your Equity Before It Disappears
Stock options and RSUs are not Monopoly money. They’re either a ticket to future wealth or a financial sinkhole, depending on how you handle them. Below are the different types of stock options companies offer, and some things to think about when you decide on what you should do.
ISOs (Incentive Stock Options): You usually have 90 days to exercise after termination. Miss it and they turn into NQOs (Non-Qualified Options, more on this below), or you simply FORFEIT them. Don’t wait until day 89 to figure out what you should do, talk to someone now.
NQOs: Exercising your NQO options triggers an immediate tax bill. If the shares aren’t liquid, congratulations—you’ve just bought yourself an expensive illiquid asset. Proceed with caution.
RSUs: Vested shares of RSUs are yours, unvested ones will vanish after you leave the company. Private company RSUs with a “second trigger” require patience; you’ll need to wait for that IPO or acquisition to be able to sell your shares.
No cash to exercise your stock options? Companies like ESO Fund or EquityZen can front you the money in exchange for a chunk of your upside. Working with these companies can be better than watching your options evaporate.
3. Don’t Panic About Your 401(k)
Your retirement money is fine. You can leave it where it is or roll it into an IRA later. Just don’t cash it out unless you want to hand 30–40% of what you cashed out to the IRS. Seriously, the money is fine where it is. Just make sure you can still log in to your 401(k) plan account after you’ve left the company and that your name and address are correct and up-to-date. This is not throwaway advice here, folks—if your name and address don’t match, you could be sending a check to your ex-boyfriend’s apartment.
Also, if your employer offers a 401(k) match, make sure to check whether your employer’s match was vested and track year-to-date contributions so you don’t overcontribute at your next job.
4. Protect Your Health Coverage
Job gone, health insurance gone. Fuck. COBRA is an option, but it’s usually prohibitively expensive because your employer is no longer footing the bill. Your state’s marketplace or Healthcare.gov usually offers cheaper plans. However, if you’re mid-treatment or pregnant and can’t switch providers, then COBRA might be the way to go. If your partner has coverage, consider joining their healthcare plan—even as a domestic partner if the insurer allows. Just don’t go uninsured. Medical bankruptcy is the dumbest hill to die on.
5. Disability Insurance, the Forgotten Stepchild
Everyone obsesses over having life insurance, but disability is the one that actually ruins lives. Becoming disabled in some capacity is four times as likely than death, and is usually caused by something boring but debilitating, like back pain. If your employer’s disability coverage disappears, look into professional associations or private agents to help get disability insurance for yourself. It’s not fun, but neither is losing your income for years.
6. Tie Up Loose Ends
Download every pay stub from the portal (or request them if your company is old school), especially if you had equity vesting. Your tax preparer will thank you.
Get a human HR contact before you leave. You’ll need them in the future to get old pay stubs, potentially figure out health insurance, roll over your 401(k), and more.
Apply for unemployment. Severance usually doesn’t disqualify you.
Check your vacation payout. “Unlimited PTO” is HR’s way of saying “we owe you nothing.”
Update your address for your W-2. The IRS does not care that your former company ghosted you.
Tips and Tricks
Negotiate your severance.
Most people don’t realize severance is negotiable. If you’ve been a high performer or have unvested equity about to hit, ask for more compensation. Ask to double your severance package (usually it’s paid out as months of salary). The worst-case scenario here is that they can say no. Best case, you buy yourself months of breathing room.
Cash out your FSA (Flexible Spending Account) before you lose it.
That “use it or lose it” rule isn’t a joke when it comes to FSAs. If you have $800 left, buy new glasses, stock up on contact lenses, or order a year’s supply of ibuprofen from FSAStore.com before your last day.
Don’t ghost your coworkers.
Layoffs create survivor’s guilt. If you liked your team, send a goodbye note with your personal contact info. Your next job might come from the people still trapped inside the building you just left.
Mind your LinkedIn settings.
If you’ve been informed that you are being laid off, but are still working in the interim before your final day, turn off “open to work” unless you’re cool with broadcasting desperation. Instead, use the private setting so recruiters see it, but your boss doesn’t. However, if you’re already gone, lean into it—“currently seeking new challenges” is corporate-speak for “hire me before I lose my mind.”
Ask about outplacement services.
Some companies pay third-party firms to help laid-off employees polish resumes, rehearse interviews, and connect with recruiters. It’s basically career coaching on the company’s dime. Take it. You could probably use a little accountability and structure now that your days aren’t filled with meetings that should have been emails.
Watch out for clawbacks.
If your employer paid for grad school, a professional certification, or even relocation, check your contract. Some companies make you repay if you leave “too soon.” This is not the kind of surprise bill you want six months into unemployment.
Check your state rules on unemployment.
Some states reduce your unemployment if you’re collecting severance, others don’t. Filing one week late could cost you hundreds. Bureaucracy is a beast.
Don’t sign away your rights too fast.
That separation agreement? Read it carefully. Sometimes they hide non-compete clauses, NDA landmines, or terms that limit future severance eligibility. These agreements are worth running past an employment lawyer if anything looks sketchy.
You are Not Your Layoff
A layoff feels like the apocalypse, but it doesn’t have to be. With an emergency fund, some clear-eyed planning, it can be just a chapter break. My friend turned her layoff into the best summer of her adult life. Yours might not feel like that at first, but give it time.
The truth is, jobs are temporary. Money is the parachute. It buys you choices, space, and maybe even freedom. Which is not the worst consolation prize while you wait for your next gig.
Parting shot: Layoffs feel like endings, but most of the time they’re just plot twists.
this is incredible advice. thank you. also, the part in severance when the fevered person is folding shirts over and over in the retail store will stay with me forever.
Did not have an emergency fund because I didn’t make much money. I already was cooking everything from scratch and had no dumb unnecessary monthly costs to cut.
This was in 2015. I never found another stable FT job and will struggle with cobbled-together freelance, Substack, Medium and novels forever. This is the reality for many people around 50 who are laid off unless they are in a really good field, which I wasn’t. Couldn’t have known in 1984 that newspapers would implode but obviously they did.
Other fields people are choosing right now will go away long before you’re ready to stop working, too.
You think you’ll just grind harder, try harder to find a job, network like mad, re-do your resume to fit every job, etc, and you’ll eventually find something. I thought that, too.
You can’t just … never get another job if you have good skills you keep up, a good reputation in your field and a willingness to try other jobs, right?
Oh yes you can!