Created: April 9, 2023
Modified: April 7, 2023

Episode 90: What Should I do if I’ve Been Laid Off?

Today’s question is, “What should I do if I’ve been laid off?” We’re at a point right now where unemployment is historically low, however we are hearing more stories about companies laying people off. What we need to understand is that there’s a big difference between being fired and being laid off. If someone is fired, it is because of their own actions. If a layoff occurs, it is not the fault of those being let go; businesses often decide to undergo layoffs to cut costs.

Unemployment Benefits and Severance Pay

In the event of a layoff, it’s important to ask about severance pay and other potential benefits. As an individual who has been let go from their job, these can provide valuable assistance in transitioning into a new position. It is typical for those who have been laid off to continue receiving severance benefits, the amount of which can depend on the length of time they were employed with the firm. You also want to find out if you are going to be paid out for unused sick or vacation time that you’ve accrued.

Health Insurance

It’s also important to ask about your health insurance. It’s very common for an employee to get health insurance through their employer, so the question you want to ask is how long is my health insurance being paid for and what are my options after that? If you’ve been recently laid off, there is an option called Cobra which enables you to keep your existing health insurance provided by the former employer. However, this may not be subsidized so it would require payment of full price for up to 18 months. There are two viable options: use your spouse’s health insurance or continue with the current coverage under cobra – whichever suits you best in your particular situation.

Employer Sponsored Retirement Accounts

It’s not unusual for employers to sponsor retirement plans like 401(k)s or 403(b)s. There are instances, should you get laid off from your job, where your former employer may require the funds in such accounts to be transferred out. Many people transfer the money into an individual retirement account (IRA), which will provide them with more control and a greater variety of options in terms of investments and management.

Figuring Out an Income Plan for Unemployment

If you’ve been laid off through no fault of your own, then don’t forget to apply for unemployment benefits. You are entitled to receive financial assistance until you can secure steady employment again. The amount of the compensation will vary by the state that you live in and your level of income from that company. Now is the ideal time to assess your finances, especially while you do not have any income coming in from an employer. Do you and your household have enough income available to meet all of your expenses? If there’s a spouse that brings in some money – fantastic! However, if this isn’t the case, it might be wise to start looking at ways to cut back on spending and reduce certain unnecessary expenditures.

A Layoff is Not a Reflection of Your Value

Ultimately, a layoff is an experience that happens to many people, even the best of us. From a non-financial standpoint, it can be a difficult period both mentally and emotionally. Through challenging times, it’s important to keep your head up and take your time to make peace with what has happened. Make sure you understand that the layoff itself is not any type of reflection of your value.

Planning for retirement can be stressful – even in the best of circumstances when you’ve had time to prepare and make arrangements. However, when you’re being forced to retire, it makes the process that much more stressful. Get your FREE copy of our book “Forced to Retire: 7 Crucial Decisions to Make” that can help walk you through these important decisions, step by step.

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