How to Navigate a Layoff
by Allison McNearney
So, you’ve been laid off—or you feel it coming. The experience is becoming all too common in the current job market, but that doesn’t make it any easier to handle or hurt any less.
It’s something I know personally after undergoing a layoff in the summer of 2024 (which you can learn more about in this episode of Less Than Expert). It can feel overwhelming in the moment to not only process the difficult feelings that inevitably come with the experience, but also to deal with all the adulting that needs to be done in its aftermath (separation agreements, health insurance, unemployment, oh my).
But you don’t have to go it alone. Here is a guide to help you get started with the things you’ll need to take care of after you receive notice.
THE PRACTICAL CONSIDERATIONS
In the days and months after you’ve been laid off, there are a few things you’ll need to handle. These are the big ones, listed in order of urgency.
Spend those FSA dollars:
Your FSA account will probably not be the first thing on your mind after finding out you’re being laid off. But it’s important to look into it immediately. Here’s why: for reasons that will never make sense to me, in some instances, you only have until the end of that day to spend any of the remaining hard-earned dollars that you’ve saved. In other cases, you may have until your healthcare coverage ends, often at the end of the month. In either case, there is usually a grace period of an additional few weeks to months to file any past receipts for reimbursement; however, the purchases must have been made during your eligibility.
Long story short: if you’re like me, you may need to go on a spending spree the day you get the bad news. While it can be tempting to treat yourself (you bet I looked at a fancy red light therapy mask), consider things you might actually need over the next year (in my case, two years’ worth of contacts).
Review your separation agreement:
Your HR contact will be your go-to source for all information on expectations for finalizing your separation agreement. Usually, you will receive the document pretty quickly after you’re given notice, and you should have a couple of days to review it. (If that isn’t offered, ask for it.) The implication here is that you can raise any issues you have or negotiate terms that you’re unhappy with—which you absolutely should do if you or any legal counsel you might consult has any issues—but remember, the power is in the hands of the company here. You absolutely do not have to sign the agreement. But if you don’t, you won’t receive any monetary benefits the company is offering in exchange for your John Hancock, like severance or paying out your unused PTO.
File for unemployment:
Severance has nothing to do with unemployment. Take it from me and my cautionary tale, file for unemployment the first day you’re eligible in your state to get the most out of these benefits. (In most states, if you’re eligible for unemployment, you can begin filing as soon as you’re laid off.) Most importantly, don’t be ashamed of collecting unemployment. Remember: you’ve paid into this program via your taxes for all the years you’ve been working for just this reason.
As you’re budgeting for your next few months, keep in mind that while you might file for unemployment on day one, benefits usually take several weeks to kick in. Also, when it comes to any severance you’re offered, one thing is certain: the government is going to get its cut. How much that is depends on the structure of the payout, which will be spelled out in your separation agreement. If you receive the money in one lump sum, it will be taxed similarly to a bonus (22% for under $1 million). If it’s paid out like a normal paycheck, it will most likely be taxed like your normal paycheck.
Figure out your health insurance plan:
Your separation agreement should ALSO include when your healthcare coverage ends, though it’s pretty standard for it to end at the end of the month in which you stop working for the company. After that, you have 2 main options: 1. Go on COBRA, which is essentially a continuation of your existing healthcare plan, but at a massively inflated rate. 2. Pick a new plan through the ACA Marketplace.
The option you choose will depend on your circumstances. Your employer’s plan via COBRA might be more flexible and generous than the ACA plans. If you have a lot of healthcare needs coming up over the next year like known surgeries, or if the plan you’re on has specialty perks like fertility benefits (which definitely will not be offered via ACA plans), it might be worth paying more to continue that coverage. If you’re expecting an average healthcare year, buying a plan through the marketplace will usually be more cost-effective, though your options are more limited and care is usually restricted to in-network providers. Crunch the numbers, do a little projection of what your needs may be, and choose whatever options fit best.
Update your resume:
When you’re smarting from a layoff, it can be hard to make yourself think about what comes next. But it’s important to take a little time to do so before you forget key details that might be helpful later. If you see a layoff coming, or while your former role is still fresh, update your resume and your personal work history notes. Make sure you include any concrete metrics you achieved, major projects you worked on, or areas where you had a significant impact on the business. I also recommend having a work history document where you keep more in-depth notes. When you start interviewing for a new job, you are going to be asked questions about what projects you’re most proud of, the biggest challenges you faced in your career, your approach to management, and more. The story you tell about your experience is going to be more compelling if you can lean on the observations and notes you made when your memory was sharpest.
Consider moving your 401(k) and HSA accounts:
You can leave your 401(k) and Health Savings Account where they are for as long as you want. But at some point, you might want to evaluate whether it might serve you better to move them somewhere else.
There are two things to consider here: 1. Do you have other 401(k) or HSA accounts that you would like to roll together and consolidate? 2. What are the administrative fees on the accounts (and do these go up if you are no longer employed by the company)? If the fees are high, you might consider consolidating your accounts wherever you will get the lowest fees, or opening a new Rollover 401(k) account through a brokerage like Fidelity or Vanguard that you can manage yourself. While you must keep this money in 401k and HSA accounts, you are under no obligation to keep it where your former company held it.
THE MINDSET CONSIDERATIONS
Whether losing your job is expected or a complete shock, whether you’re devastated or secretly more excited for what comes next, it’s important to acknowledge that losing your job is hard. It feels like a blow to your ego, no matter how it goes down. If you give yourself time and space to process that reality and those feelings before you jump into something new, you’ll be much better off.
Take a break—it doesn’t matter how long:
Whether you have the runway to take a long weekend, a few weeks of staycation, or go on some fabulous adventure, it’s really important to take some time away from real life. Wait until after the dust settles and the urgent practical considerations have been handled, and then give yourself a break.
Work culture in the US is designed for burnout. Most people only get 2-3 weeks off a year, while working for years on end. This is one of the few times in your life when you can unplug and give yourself some space to recover without a boss or work emergencies intruding. See it as an opportunity—and if you feel guilty for taking a few days away when you’re out of work, remind yourself that you will be more recovered, relaxed, and ready to jump wholeheartedly into the next opportunity if you decompress rather than spend an extra few days trolling LinkedIn.
Do the work to process your experience:
Getting laid off is stressful. Add that to your existing anxiety and burnout from normal life, and the situation can spiral downward fast if you aren’t careful. Making an effort to process the difficult experience you just went through will ensure that those feelings you otherwise might stuff down don’t rear up at an inopportune time—like when you’re trying to bust your butt to impress a new boss.
There are a lot of things you can do to process your experience, like working with a therapist or a coach, but here are a few easy ways to get started on your own:
Get outside and move: You will always feel better thinking about what you went through or planning your next chapter with a little sunshine and exercise. It is so easy to spend your days glued to the couch looking for your next opportunity, but you’ll be in a much better position if you make yourself get outside and get some exercise (even if it’s just a short walk), while you examine how you’re really feeling and what you need to stay balanced in this difficult moment.
Pick up a pen: This may seem silly to those who aren’t used to writing, but regularly making space to jot down what’s on your mind can be hugely helpful in processing your feelings. Start with a blank page and a blank mind, and write whatever comes to you as you reflect on what you just went through. As you get a better handle on what you’re thinking and feeling, explore more guided prompts, like what would you like your life to look like in five years? What matters to you most in your life and in your job? What kind of work gives you the most joy and meaning? If you imagine your ideal day, what would you want it to look like? And what do you never want to deal with again?
Be kind to yourself: Shit happens. No matter the reason for your layoff, it’s a common experience in our modern working world. Do what you need to do to get over any guilt or shame you might feel and give yourself grace to move on to something bigger and better.
Be strategic about your next move:
If you can, take a moment to figure out what you really want in your next job. Think about the work and the working environment that really lights you up. Do you want to stay on the same path or use this experience as a chance to pivot to something new? Make a list of the people whose careers you admire, and study what choices they made. While you might not have the leisure to be picky today, knowing what you really want will pay off down the road. Figure out what work would be truly fulfilling for you and make a plan to start networking or building your resume to make it happen.
Allison McNearney is a writer, editor, and creative mindset coach. She has been a journalist for over 15 years, writing for publications including The New York Times, The Daily Beast, and National Geographic. After experiencing a layoff herself in 2024, she brings first hand perspective to conversations about career pivots, identity, and rebuilding. Allison helps writers, artists, and entrepreneurs find the work that lights them up and move from stuck to creatively fulfilled. You can contact her at allisonmcnearney@gmail.com or on her website: allisonmcnearney.com