If you’ve just been laid off or suspect you might be laid off soon, you need to consider your next steps. A severance package can offer short-term relief, but it may not stretch as far as you think, so acting quickly and strategically to gain financial stability is essential.

This guide will provide valuable insight on how to survive a layoff and protect your savings while you search for your next role.

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How do layoffs work? 

Employers lay off workers for multiple reasons, including market downturns, restructuring after a merger or acquisition, cost-cutting measures, and automation. In the case of a mass layoff, your employer may cite one or more of these factors. But layoffs don’t always have an impact on entire departments or locations — sometimes they affect a single role. 

When layoffs happen, some employers offer a severance package. This may include a lump sum payment or continued salary, extended health coverage, and other benefits for a specified period. Not all employers offer severance packages, so it’s worth reviewing your HR department’s policies to understand what’s available. 

Here’s what a layoff may look like:

• Notification: You may be informed in a meeting, on a call, via email, or via a mass layoff letter.
• Exit process: You’ll likely have to return any company property and your employee ID. Your employer may require security to escort you from the building. 
• Meeting with HR: If your employer offers a severance package or support, you’ll typically meet with HR to review the details.

Even if you feel secure in your role, preparing for a layoff can help you make a smoother transition and stay financially ready for any sudden changes.

How common are layoffs in today’s job market?

Layoffs aren’t limited to recessions — they happen even when the economy is strong. Technological advances, for example, can boost productivity while displacing workers in specific sectors. Similarly, regional economic shifts can have an impact on jobs tied to local industries, such as oil in Texas or agriculture in the Midwest. 

Staying aware of economic trends can help you anticipate potential layoffs and give you time to prepare. Monitor company performance, leadership changes, and industry news so you’re not caught off guard if cuts happen. 

How to survive a layoff financially

Feeling anxious or overwhelmed after being laid off is normal, but with a few smart steps, you can protect your finances until you find a new job. 

1. Review emergency savings and identify all liquid assets

Start by taking inventory of your liquid assets: Any funds you can access quickly without facing fines or taxes. This includes checking and savings accounts, emergency funds, and any severance pay you received. These are your most important resources — calculate how long they can sustain your essential expenses.

2. Categorize essential vs. non-essential expenses

Understanding your spending is key to creating a lean but realistic budget. Determine what your essential and non-essential expenses are:

Essential expenses can include: 

• Rent or mortgage
• Car payments
• Insurance
• Utilities
• Groceries
• Medical needs

Non-essential expenses can include:

• Entertainment like streaming services
• Restaurant or take-out meals
• Travel
• Charitable donations
• Subscriptions
  

3. Create a lean layoff budget

To prepare your budget for a layoff, prioritize essential expenses, or as many as possible. If you have a surplus leftover, resist the temptation to use all of it for non-essential items — choosing just one or two for the time being. Reserve extra money for unexpected costs such as a car repair or medical bill. 

4. Pause non-essential subscriptions or services

Review your credit card and bank statements to identify recurring charges. Many services now use subscription models that can quietly eat into your budget. Consider canceling or pausing those you don’t use regularly, or sharing subscriptions with members of your household. 

5. Apply for unemployment benefits

After a layoff, you’re likely eligible for unemployment insurance. Each state has its process, but benefits can offer an essential short-term income while you look for a new job. File as soon as possible to avoid delays.

6. Contact lenders or creditors to renegotiate terms

If you’re concerned about meeting your debt obligations, be proactive. Many lenders offer deferred payment options or temporary interest-only plans, but don’t wait until you fall behind to contact them.

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Should I withdraw money from my investments?

If you have funds in stocks, bonds, 401(k)s, or annuities, it may be tempting to tap into those. But withdrawing from your investments should be a last resort. Here’s why:

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• Market timing: Layoffs often occur during economic downturns, when investments may be down. Selling now wouldn’t allow your portfolio to recover and may result in losses. 
• Penalties: Many intermediate and long-term investments have penalties for early withdrawal. For example, annuities may carry surrender fees, and certificates of deposit often come with early withdrawal fees. 
• Tax implications: Depending on the type of account you liquidate, selling your investment could trigger capital gains taxes or increase your taxable income for the year. 
• Retirement account penalties: Withdrawing from retirement accounts like a 401(k) or IRA before you turn 59½ typically results in a 10% early distribution penalty. There’s an exception if you’re over 55 and withdrawing from a 401(k) tied to the employer that laid you off, but this doesn’t apply to previous employers’ plans.

Instead of cashing out, explore whether your retirement plan allows you to borrow against your balance without triggering penalties. This approach can give you access to funds without derailing your long-term savings goals. 

What to do next and how Gainbridge can help 

Losing your job is disruptive, but it doesn’t have to compromise your financial future. Fixed annuities can offer stability during periods of uncertainty, with predictable returns that help you to stay on track. At Gainbridge, some of our annuity products let you withdraw up to 10% of your premium (1^st year) or account value in subsequent years r, providing accessible, emergency, funds when you need them most. 

Gainbridge SteadyPace™ is a multi-year guaranteed annuity that locks in fixed growth over time. If you’re looking for a more flexible option, Gainbridge ParityFlex™ allows access to funds and offers consistent interest. Both products allow a 10% annual free withdrawal amount surrender fees, giving you control during moments of transition. Of course, if you are under age 59 ½, your withdrawal is subject to a 10% IRS tax penalty and if over the free withdrawal amount will incur a surrender and potential market value adjustment. And, any withdrawal amount will reduce your account value and retirement savings.

Build a personalized plan with Gainbridge

Feel more secure in your financial future with Gainbridge’s innovative, fee-free platform and tailor a retirement plan that works for you. Whether you’re rebuilding after a job loss or preparing for the unexpected, Gainbridge is here to help you navigate life’s changes with confidence.

This article is for informational purposes only and shouldn’t be relied on as personal investment advice or tax or legal advice.

Annuities issued by Gainbridge Life Insurance Company located in Zionsville, Indiana. Guarantees back by the financial strength and claims paying ability of the issuing insurance company.