From Layoff to Payoff: Your Guide to Unemployment and Severance Management

💸 From Layoff to Payoff: Your Guide to Unemployment and Severance Management

Whether unexpected or not, losing your job creates a whirlwind of chaos and uncertainty. However, a combination of unemployment benefits and proper management of your severance (if given one) can provide much needed financial assistance while you search for a new role. Below, we cover key steps to successfully apply for and receive unemployment benefits, as well as how to wisely manage your severance package.

🏛️ Unemployment Benefits

1. Filing Your Initial Claim

• File your claim as soon as you become unemployed. Do not wait until your severance pay runs out.

• File online through your state's website or call their unemployment phone number. Have your SSN, former employer's name and address, last day worked, driver's license, and bank account info ready.

• Complete all questions accurately. Provide your work history for the last 18 months.

• You'll receive a monetary determination showing your weekly benefit amount. Review it closely and appeal any incorrect information within the timeframe allotted, usually 10-20 days.

2. Certifying for Weekly Benefits

• Certify every week or every other week to confirm you are still unemployed and eligible for benefits. This can be done online, by phone, or by mail.

• When certifying, report any earnings if you worked part-time or temporary jobs that week. Report gross earnings before taxes.

• Continue searching and applying for jobs as required by your state. Record details of your work search activities like company names, jobs applied for, application methods, and contact dates.

3. Receiving Benefit Payments

• Most states now pay benefits via reloadable debit card or direct deposit, not paper checks. Activate your debit card if you receive one.

• Set up direct deposit if that option is available to get faster payment. Provide your bank account and routing numbers.

• If you don't receive payment within 2 weeks of certifying, follow up with the state agency.

4. Eligibility Issues

• Eligibility issues like quitting a job, getting fired, refusing work or attending school can delay or fully deny benefits.

• If denied benefits, file an appeal within the timeframe allotted and provide any additional documentation that supports your claim. Attend any hearings scheduled.

5. Next Steps

• Enroll with your state's employment services website to access local job listings and career resources.

• Consider training programs or workshops to gain new in-demand skills. Your state may cover the costs through unemployment.

• Unemployment benefits last up to 26 weeks in most states. Be financially prepared if benefits run out before finding a new job.

💰 Managing Your Severance

Managing a severance package wisely while looking for a new job can make a significant difference in your financial stability and job search experience. Here's some advice on how to go about it:

1. Budgeting and Financial Planning

• Create a Budget: Assess your monthly expenses and create a budget that accounts for necessities like rent, utilities, groceries, and insurance.

• Emergency Fund: If you don't already have one, allocate a portion of your severance to an emergency fund that can cover at least 3-6 months of living expenses.

• Debt Payments: Consider using part of the severance to pay down high-interest debts, but balance this with the need for liquidity.

2. Tax Considerations

• Tax Withholding: Severance pay is taxable. Consult a tax advisor to understand your tax obligations and consider setting aside a portion for taxes.

• Retirement Accounts: If your severance package includes contributions to a 401(k) or other retirement accounts, understand the tax implications of withdrawing from these accounts.

3. Health Insurance

• COBRA: If your employer offers health insurance, you may be eligible for COBRA continuation coverage. However, this can be expensive, so compare it with individual plans.

• Health Savings Account (HSA): If you have an HSA, this can be a tax-efficient way to pay for medical expenses during your job search.

4. Investment and Savings

• Low-Risk Investments: Consider putting a portion of your severance into low-risk, easily accessible investments like money market accounts or short-term CDs.

• Avoid High-Risk Ventures: Now is not the time to invest in high-risk stocks or start a new business venture unless you have a well-thought-out plan and separate capital for it.

5. Job Search and Career Development

• Networking: Use part of your severance to invest in networking opportunities, such as industry conferences or memberships in professional organizations.

• Skill Development: Consider using some funds for courses or certifications that can make you more marketable.

• Professional Help: Hiring a career coach or resume writing service could be a good investment to speed up your job search.

6. Legal Advice

• Consult an Attorney: Before accepting a severance package, it may be beneficial to consult an employment attorney to ensure you're getting a fair deal and to understand any non-compete or confidentiality clauses.

7. Miscellaneous

• Avoid Luxuries: It might be tempting to use the severance for a vacation or luxury items, but it's advisable to focus on necessities until you secure a new job.

By carefully managing your severance package, you can maintain financial stability, invest in your career development, and potentially shorten the duration of your job search.

📰 Notable Layoffs this Week

• Sept 26, 2023 – Byju’s to cut as many as 5,000 more jobs amid business restructuring.

• Sept 24, 2023 – T-Mobile plans to lay off 5,000 employees, about 7% of the workforce.

• Sept 23, 2023 – Qualcomm plans job cuts in Shanghai amid U.S.-China tech tensions and economic challenges.

• Sept 22, 2023 – The Federal Reserve plans to cut roughly 300 employees as employers restructure their staffing levels.

• Sept 21, 2023 – General Motors has announced the idling of the Fairfax assembly plant in Kansas, leading to 2,000 employees losing their jobs.

• Sept 20, 2023 – Honeywell plans to close the West Chester plant and lay off 66 workers.

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