Getting laid off from your job is one of the most difficult things that can happen in a career—but also possibly one of the most transformative.
While the loss of income can be especially stressful given the precarious state of many Americans’ finances, the impact can reach far beyond a missed paycheck. Your career trajectory, sense of stability, and even your identity can be challenged.
Frankly, losing your job sucks. Lindsey and I have both been through it, and so have millions of other Americans. Still, it can feel lonely and scary to find yourself suddenly without a job.
And yet, under the best circumstances, a layoff can be the catalyst for a long-needed career reinvention. But first, you have to get through all of the financial, logistical, and emotional questions that arise in the immediate aftermath of a job loss.
Included below are practical tips on applying for unemployment benefits, negotiating severance, cleaning up your LinkedIn profile, and preparing for what’s next. Whatever your first step after a layoff, remember to give yourself some grace as you navigate these challenges.
Be smart about severance
Chances are, the day of your layoff will come as a shock. Being thrust into this uncertain situation can leave you feeling unmoored and anxious—and potentially cloud your judgement. It’s important not to take any action until the initial feelings pass.
“We have to take a step back and pull our emotions out of it a little bit,” says Kelli Smith, a certified financial planner (CFP) with Edelman Financial Engines. “We want to approach our finances with some prudence and intentionality.”
When you learn of your layoff, you may be presented with a severance offer and other documents related to the job termination. Employment experts advise against signing anything right away. Ideally, you can wait at least a day, until you’re likely to be more clearheaded. In some cases, it might be smart to talk to an employment attorney or your union representatives to make sure the severance is a fair deal.
You’ll want to carefully review the documents so you understand the severance offer and conditions, benefits expiration, vacation payouts, and so on. You may be asked to sign a nondisclosure agreement, so you’ll want to understand what that is and what it means for your future.
Like your starting salary, Smith says, the severance you’re offered can be negotiated. “The answer is always no to a question that you don’t ask,” she says. “Even just one pay period to help bridge the gap for job searching can be helpful.”
Apply for unemployment insurance
Financial experts advise applying for unemployment insurance (UI) benefits as soon as you can, arguably on the same day you are laid off. Even if you receive some type of severance payout, it’s good to get in your state’s unemployment system and get the ball rolling.
Your state’s respective labor department (or whichever department handles UI) will likely ask about any severance and adjust payouts accordingly. The length of time you qualify for UI varies by state, and you typically need to recertify each week.
The payout will be based on how much you earned at your job and is paid out weekly.
Review your budget
A sudden loss of income means you will likely need to reevaluate where you’re spending money and make cuts as needed. Review your cash flow, separate needs from wants, and be more intentional about your spending.
This could include making the hard choice to cut some of the budget line items, says Smith.
“If you’re going into debt to continue your lifestyle, it’s going to put you in a predicament down the road,” says Smith. “It’s not going to be the most ideal scenario for anybody; [you] might have to make some sacrifices, but it’s not permanent.”
Appraise health insurance and other benefit options
If you had health insurance via your employer, you’ll need to pick a new plan. There are a few options:
- Sign up for Consolidated Omnibus Budget Reconciliation Act (COBRA) health coverage: This allows you to stay enrolled in your ex-employer’s plan for a set amount of time after the layoff. However, it’s typically much more expensive because your old employer will no longer subsidize the cost, and there can be added administrative fees.
- Enroll in spouse’s health insurance plan: If you’re married and your spouse has access to health insurance at work, a job loss is a “Life Event,” meaning you may be able to enroll in his or her employer’s plan outside of the typical open enrollment period. Your spouse will likely need to talk to his or her company’s HR department to get started. (In some states, domestic partners can also enroll in their partner’s plan.)
- Look into the Health Insurance Marketplace: Options for health care through the exchange will vary by state. Eligibility for subsidies is based on annual income.
- Enroll in Medicaid or Medicare: Eligible low-income individuals may qualify for Medicaid coverage, again, depending on what state you live in. There is also the Children’s Health Insurance Program (CHIPS), which covers children. You can find more information here. Eligibility is based on current household income. If you are 65 or older, sign up for Medicare.
Make a list of the other benefits you might be losing, says Smith, like pet insurance or life insurance. For the latter, you’ll want to find a new policy if you have children or even a mortgage. If your spouse would face financial hardship from the loss of your life (and vice versa), you need life insurance.
In fact, Smith advises anyone who needs a life insurance policy to get one outside of what your employer offers, specifically because there’s always some risk of job loss and, therefore, the coverage.
Don’t forget about your retirement account
If you’re enrolled in your workplace’s retirement plan—a 401(k) or 403(b)—you’ll want to think carefully about what you want to do next:
- Keep your retirement savings in your old employer’s plan: This is the easiest option, though it’s not available to everyone. And sometimes there are high plan fees involved.
- Roll your account into an IRA: You can roll over your 401(k) funds into an IRA. This can be smart for a few reasons, including that the IRA may offer better investment options, may have lower fees, and can be helpful to keep accounts simplified and streamlined, says Smith.
- Roll your account into a new employer’s plan: If you get a new job right away, you may be able to roll the funds into your new employer’s 401(k) plan.
- Cash out: You can withdraw the funds from your old retirement account. While this is an option, pretty much every financial advisor warns against doing this, unless you are desperate for the cash. If you are younger than 59½ when you withdraw the funds, you will likely owe ordinary income taxes and a 10% early withdrawal fee on any money you withdraw. There is an exception for workers who are between 55 and 59 ½—The Rule of 55—which allows them to take penalty-free withdrawals from their 401(k) plan. It does not apply to withdrawals from IRAs. They will still need to pay ordinary taxes.
Other accounts to keep an eye on: health savings accounts (HSA) and/or flexible spending accounts (FSA).
Though many people try to save their HSA contributions for medical care in retirement, you are allowed to use the funds to pay for health insurance premiums, including COBRA.
And if you have an FSA, try to spend down the remaining funds quickly. Once you’re no longer an official employee, you lose access to those accounts (including health care and dependent care FSAs).
Also, layoffs can accelerate timelines for stock options, restricted stock units (RSUs), and other incentive-based compensation—so make sure you understand the timeline and the tax implications. If you’re negotiating a severance agreement, you can ask for a few more months to exercise stock options, giving you a little more time to get the money to do so. There are also companies that can loan the money needed to exercise the options—but with these more complex maneuvers, you should consult a financial professional for advice.
If you can, take a break
If you’re in a good financial position, don’t feel pressure to immediately look for a new job. It can be to your benefit to take a few days, weeks, or months to grieve the job you lost and have some time to yourself.
Brittney Reynolds, 30, has been laid off four times since the Covid-19 pandemic. Near the end of 2025, after her fourth job loss, she decided to book a trip to Paris. She was worried about money, of course, but told herself it would come. She recently returned from the trip and has no regrets.
“What I really learned after a year of being laid off is, money’s going to come, and money’s going to go,” says Reynolds. “Be patient with yourself and understand that it’s going to fluctuate day to day. Some days you’re going to feel like shit, and other days you’re going to wake up and say, ‘I can do anything.’”
‘Relearn the world’
If you are able to take time off between roles—say, you get a few months’ severance or have a healthy amount of cash in savings—give yourself some time to really think about what’s next.
Rather than immediately jumping into the next role, Tracy Wheeler, executive director and curator of the nonprofit End Well, suggests using the downtime to research new skills or industries you might be interested in. Wheeler has reinvented her career a few times, with successful stints in fashion, at a college, and now at End Well.
“You have the time to go out and relearn the world,” says Wheeler. “Develop your senses: Go to museums, read, watch things. Just push yourself.”
Clean up your LinkedIn
If you have a LinkedIn profile, there are a variety of ways to use it after a layoff.
The first is to share a post about your job loss. While this might seem like an embarrassing admission, Catherine Fisher, a career expert and vice president of communications at LinkedIn, says as layoffs become more common, talking about a job loss is becoming normalized. Posting about your layoff and what you are looking for next (if you know) can help you find connections who can help you land that next role.
LinkedIn also allows users to put an “Open to Work” banner on their profile. You can select to have this visible to everyone, or only to recruiters.
“If you don’t tell people, people don’t know how to help you,” Fisher says.
Next, you’ll want to make sure all of your skills are up to date on your profile, including with a recent headshot.
Add skills to your experience section. These help recruiters and hiring managers get a better sense of what you have to offer—and they help them find you on the platform, because they are searching it for specific skills, Fisher says. LinkedIn publishes the top skills employers are looking for—it can be worthwhile to include them if applicable.
Tap your network
Your professional network is one of your biggest tools in the job search process—especially in the age of AI, when recruiters and hiring managers are inundated with résumés and applications and cannot possibly sort through all of them.
Stanford sociologist Mark Granovetter popularized the idea of strong and weak ties over 50 years ago, and his findings still hold true today. According to his research, weak ties, or casual connections and loose acquaintances, tend to be more helpful than close friends or coworkers in securing employment.
You often have less in common with weak ties than with strong ties—and that means they have knowledge of companies, job openings, and connections you don’t.
And while Granovetter’s initial research dates back to the ’70s, he said in a 2022 interview that weak ties are perhaps even more important in today’s AI-addled job market.
“No matter what kind of big data or artificial intelligence or machine learning that employers are able to draw on, they will never know as much about a person as someone who actually knows them and has worked with them and knows their personality and knows what they do in their spare time and how they approach problems,” he said in an interview with the BBVA Foundation.
In addition to strong and weak ties, your dormant ties can also be a game changer. These are people you worked with or otherwise knew well in the past but haven’t kept up with. Maybe this is a manager from your first job who you got along well with or a close friend from another department.
Over a decade’s worth of research from Daniel Levin of Rutgers University finds it can be easier to get back in touch with these acquaintances than with weak ties because you had a close connection at one point; they may even be someone you’ve meant to call for a while because you genuinely want to be in touch. There’s history.
But they’ve also been living their life in the time you fell out of touch, meaning they may have novel and useful information from the different people they’ve met and different things they’ve learned over the ensuing years. You can reach out to them, not necessarily to ask for a job, but for career advice, support, and introductions.
In fact, LinkedIn’s Fisher says it’s always good to look for who can act as an intermediary between you and a recruiter or potential professional contact.
“It’s always better if you have someone in common who can make the introduction for you,” she says. “I you look at someone’s [LinkedIn] profile, it will show you who you know in common, and that makes it easier for you to say, ‘Hey, can you make this introduction to this hiring manager?’”
Talk to your kids
Depending on how old your kids are, this may also be an opportunity to talk to them about career and financial planning, says Smith. If you have a teenager, for example, you could use your job loss as an opportunity to discuss the cost of college and the degree she’s planning to pursue.
“You don’t have to share details about your finances to say, ‘Hey, a budget exists for a reason. This is why savings is important. This is why building a network is important,’” she says.
Don’t overwhelm yourself
While getting a new job is likely to be your top priority, Fisher warns against burnout. You can’t job search for 80 hours a week. Diminishing returns can come quickly.
“Have parameters—chunks of time that you’re going to use towards doing research,” she says. “Give yourself breaks. You don’t have to go out to networking events seven days a week. Have some quotas that you feel good about, that you think are manageable.”
Keep the faith
Perhaps most importantly, remember that the job search could take time (especially in the current unstable job market). But while you may face some hardship—financial and otherwise—you will eventually come through the other side.
“You have to keep your belief in yourself,” says Wheeler. “My parents panicked way more than I did. I remember sitting down with them and saying, ‘You have got to stop. You’re messing with my magic. You have to stop. This is all going to make sense.’”
Reynolds, who has been through so many layoffs, says she has learned more about herself and her capabilities over the past six years. Now, she has no doubt she can take whatever life throws at her—and maybe even end up better off.
“My worst nightmares have already come true with losing my job so many times,” says Reynolds. “It’s okay. It’s going to be fine.”
Resources
- FSA Store sells only FSA-eligible goods. Use this site if you need to spend down your medical FSA quickly.
- Laid Off is a newsletter community that features interviews with people going through job loss, run by Melanie Ehrenkranz.
- r/Layoffs is a subreddit where users share their stories, resources, and advice and generally commiserate.
- LinkedIn hosts groups for those laid off in different industries and, in some cases, from specific companies.
- Medicaid is available for eligible adults in many states.
- Mutual Aid Hub helps you find Mutual Aid networks and pantries.
- Unemployment benefits page from the Department of Labor helps you find the UI department in your state.
