Losing a Job
Losing a Job — Making your Next Move Count
Know your rights, rethink your possibilities, protect your savings and stay positive about the future.
Steadying your emotions
It’s easy to fall into the “Why me?” trap, but it doesn’t help you deal with the change. Often, job losses have nothing to do with you or your abilities. It’s stressful, but instead of seeing it as a horrible thing, try to look at it as an opportunity. A chance to change careers, or work with new people, or go back to school, or just get a fresh start.
Know your severance package
The days of getting nothing but a pink slip and a cardboard box for your things are gone. Most companies offer some sort of severance package, which may include:
- Pay, bonus or incentives — Find out about special conditions or offers and how to apply for them
- Health insurance — Ask about continuing your health coverage, including premium costs, and how long you and your family can remain covered
- Other benefits — See if benefits such as tuition reimbursement and life or disability insurance will continue
- Unemployment compensation — Ask if you qualify for unemployment insurance benefits.
Protect your retirement savings
Even though you may need money, cashing out your retirement plan is almost always a bad idea in the long term. First, you’ll owe income taxes on the money. If you’re under age 59½ you’ll also owe a 10 percent early withdrawal penalty. And, you’ll lose the tax-deferred growth potential of your savings.
Generally, you’ve got two options for keeping your retirement plan balance growing tax-deferred when you leave your job:
- Leave the money alone — Many employer plans allow you to keep your money invested even after you leave the company. While this may look like the easiest solution, you’ll be subject to your old employer’s plan rules, and you may not be able to borrow against your account balance. Obviously, you won’t be able to make any more contributions even when you find another job.
- Take it with you — You can easily transfer your money from your current plan directly to a new employer’s plan, if available, or to an Individual Retirement Account (IRA). If you have different accounts with different companies, consider consolidating all of them into one IRA. It’s easier to keep track of your retirement savings progress when you have all of your savings in the same place.
What’s your next move?
Many people are able to turn a job loss into a job opportunity. Know your rights, rethink your possibilities, protect your savings and stay positive about the future. We’re here to help.