Pink slips are piling up in 2025. Do you have a plan if you lose your job?
In January, U.S. employers announced 49,795 cuts, up 28% from the last month of 2024, according to outplacement firm Challenger, Gray & Christmas. And more layoffs made headlines in February.
Government workers are losing their jobs amid Elon Musk's DOGE cost-cutting. Big companies like Starbucks, Meta, JPMorgan Chase, Kohl's, Chevron and Southwest Airlines are also letting employees go.
Getting fired is traumatic. And it's worse when you lose your job with zero notice. A recent survey by ResumeTemplates found that half of workers are worried that President Donald Trump's policies will lead to layoffs at their companies. Here's a survival guide for those who have been fired or fear they soon will be.
Take Care Of Yourself If You Lose Your Job
If you lose your job, don't melt down emotionally. That's not going to help you bounce back. "It's very important to not let a job loss cause a loss of self-worth or self-value," said Kyle M.K., a talent strategy advisor at Indeed, an online job search platform.
Mary Clements Evans, founder and president of Evans Wealth Strategies, says the first thing she does when a client comes in after a job loss is to show them there is a path forward.
Understand The Details Of Your Severance
If you lose your job, review your severance documents. Leave nothing on the table. Also make sure you close out your dealings with your former employer in a professional manner, says career consultant Marianne Ruggiero, the founder and president of Optima Careers.
"It's a small world, and reputations matter," said Ruggiero.
Review your termination notice carefully. Look for key parts of your severance, ranging from the financial amount of your pension to health insurance options. Ruggiero wants to know how long the severance payments will last. Two weeks? Six months? A year?
"We need to know that number," said Evans. "If your salary stops abruptly, you need to replace that paycheck. So, if you have six months of salary coming versus two weeks, that is a very different plan."
Make sure you get credited for any unused vacation days or paid time off. These extra dollars can come in handy as you transition to life without a paycheck.
And if you have a pension, discuss your options for the money with a professional financial advisor. You typically have options such as taking a lump sum and then rolling over the money into an IRA and investing it yourself, or annuitizing your account balance and beginning monthly checks.
Lose Your Job? Figure Out How To Fill Income Gaps
The next step is to tally up income streams at your disposal to close the funding gap you're faced with. "You have to quickly pivot and look at your finances," said Ruggiero. "Find every bit of wiggle room you can to buy time. This is all about short-term survival."
Another way to preserve cash is paying the minimum required on any bills, adds Evans. And trim your spending. Also, spot where you can make up for lost salary, as any severance you get will have an expiration date.
One source of income is state-paid unemployment benefits, which typically last as long as 26 weeks. So, check with your state to see if you're eligible. And if so, file for benefits.
A second source of funds is your emergency fund. Hopefully, you've set aside six to 12 months of annual expenses in a high-interest-bearing account.
If you're 62 or older, Social Security is another option. You might have planned to wait until your full retirement age or even wait to age 70 to boost the size of your monthly benefit. But taking Social Security early may be a good option if you lose your job.
"Now you need cash flow, so you call Social Security, sign up, and take it early," said Ruggiero. Even if you start taking benefits, you can cut them off if you land a new job and no longer need the funds.
Retirement accounts are another source of income. But this is a last resort, says Evans. Taking early withdrawals from your 401(k) could trigger early-withdrawal penalties. You may be taxed on distributions, plus you'll lose out on money you'll need for the future.
Deal With Your 401(K) After You Lose Your Job
Weigh options for your 401(k), too. You must decide whether to keep your 401(k) at your old employer (if they allow it) or roll it over into an IRA.
If you're older than 55 and think you might want to draw on your money before the regular retirement age of 59-1/2, it's prudent to keep your 401(k) with your former employer. People older than 55 who have lost their job can draw from their 401(k) without paying the 10% early-withdrawal penalty. Withdrawals are still treated as income on your tax return. This perk isn't available if you roll your 401(k) into an IRA.
Health Insurance Options After A Job Loss
Losing your job creates another headache: finding affordable health care. You could be eligible for Cobra coverage through your employer, which is a continuation of existing coverage. The catch is you'll likely have to pay the full cost of the coverage, minus the subsidies you once got from your employer. You could also shop for insurance at a private insurer or at the health insurance marketplace created by the Affordable Care Act.
Since the price of ACA plans are based on income, you could find affordable plans if the family's main breadwinner suffers the job loss, says Evans. "The insurance marketplace doesn't base premiums on your assets," said Evans. "So, you can have $5 million in the bank, but if you don't have income coming in, you can qualify for coverage and get health insurance for your family for almost zero dollars or maybe a couple hundred dollars a month."
Job Search Tips After Losing Your Job
Being proactive is key if you think you might lose your job. "It's always a good idea to be interview-ready," said Ruggiero.
That means having your resume updated and keeping online professional job profiles current on LinkedIn, Indeed and Glassdoor.
Getting a job these days is all about networking, says Indeed's Kyle M.K. "You should immediately be reaching out to your network," said Kyle M.K. "Being referred to a prospective employer by a friend, family member or professional contact at the company you're eyeing is almost always the quickest way to get your name in front of the hiring manager."
