Skip to content
  • Home
  • Essentials
        • ESSENTIALS
        • Goals and Budgeting
          • Overview
          • Organizing Your Financial Life
          • Budgeting
          • Your Personal Net Worth
          • Setting Goals
          • Financial Planning
          • Planning Your Charitable Giving
        • Credit and Debit
          • Overview
          • Good Debt versus Bad Debt
          • How Credit Can Help—and Hurt
          • Understanding Your Credit Score
          • Preventing Identity Theft
          • Paying Off Student Debt
        • Estate Planning
          • Overview
          • Estate Plan Basics
          • Creating an Estate Plan
        • Types of Accounts
          • Overview
          • Choosing the Right Accounts
          • Individual Retirement Accounts
          • Employer Sponsored Retirement Accounts
          • Small Business Retirement Accounts
          • College Savings Accounts
          • Custodial Accounts
          • Understanding FDIC and SIPC Insurance
        • Saving
          • Overview
          • Why You Should Save and How Much
          • Making the Most of Your Paycheck
          • Saving for an Emergency
          • Eight Savings Fundamentals
        • Investing
          • Overview
          • Getting Started with Investing
          • Stocks, Bonds, and Cash
          • Fractional Shares
          • Socially Responsible Investing
          • Understanding Mutual Funds and ETFs
          • Creating an Investment Plan
          • Finding the Right Asset Allocation
          • The Advantages of Diversification
          • Benefits of Compound Growth
          • Tax-Smart Investing
          • The Importance of Monitoring and Rebalancing
        • Taxes
          • Overview
          • Income Taxes
          • Income Taxes for Children
          • Calculate Taxes
          • Payroll Taxes
        • Insurance
          • Overview
          • Insurance You Need
          • Individual Health Insurance
          • Group Health Insurance
          • Understanding Medicare
          • Disability Insurance
          • Life Insurance
          • Long-Term Care Insurance
          • Auto Insurance
  • My Life
        • MY LIFE
        • STARTING OUT
        • BUYING A CAR
        • MILITARY COMMUNITY
        • Buying a Home
          • Overview
          • Buy or Rent?
          • How Much House Can You Afford?
          • Mortgage Basics
          • Beyond Mortgage Costs
        • Jobs
          • Overview
          • Changing Jobs
          • What to Do If You Lose Your Job
          • Managing Your Finances as You Change Jobs
          • Protecting Your 401(k)
        • Getting Married
          • Overview
          • Planning and Paying for a Wedding
          • Marrying Your Finances
          • Prenups: Do You Need One?
        • Starting a Family
          • Overview
          • Budgeting for a Child
          • Insurance and Estate Planning Needs
          • Planning for a Child's Education
        • Divorce
          • Overview
          • Preparing Your Finances for Divorce
          • Protecting Yourself During a Divorce
          • Managing Money After a Divorce
        • Helping Aging Parents
          • Overview
          • Talking Money with Aging Parents
          • Insurance Needs
          • Managing Income and Investments
          • Knowing Their Wishes
          • Social Services
        • Losing a Loved One
          • Overview
          • Handling Finances After Loss
          • Special Guidelines for Loss of a Spouse
        • Retirement
          • Overview
          • Starting Retirement
          • Nearing Retirement
          • Enjoying Retirement
  • Money Talk
        • MONEY TALK
        • Planning & Goals
        • Investing Basics
        • Insurance
        • Education Savings
        • Couples & Families
        • Kids & Teens
        • Estate
        • Retirement
        • Major Purchases
        • Banking, Credit & Debt
        • Budgeting & Saving
        • Taxes
        • About Money Talk
  • Teaching Kids
        • TEACHING KIDS
        • Basics
          • Overview
          • Rules of the Road at Every Age
          • Budgeting
        • Saving
          • Overview
          • Starting the Savings Habit
          • Motivating Your Kids to Save
          • Tips for Parents with Kids and Teens
        • Investing
          • Overview
          • Introducing Kids to Investing
          • Important Investing Concepts
          • Benefits of Early Investing
          • Investment Accounts for Kids
        • Giving Back
        • Life Lessons
          • Overview
          • Tips for Financial Success
          • Managing an Allowance
          • Help Teens use Credit Wisely
        • Buying a Car
          • Overview
          • Your Teen's First Car
          • Assessing Your Teens Needs and Budget
          • Cash or Financing?
          • Auto Insurance
        • First Job
          • Overview
          • Your Teen's First Job
          • Income Tax Basics
          • Payroll Tax Basics
          • Getting Serious About Saving
        • Going to College
          • Overview
          • Costs Beyond Tuition
          • Life Away from Home
        • Leaving the Nest
          • Overview
          • A Checklist for Leaving Home
        • Activities and Resources
          • Overview
          • Overview
        • Categories
          • Overview
          • Classroom Curriculum
        • Age Groups
          • Overview
          • Elementary School
          • Middle School
          • High School
  • Teen Academy
        • GOALS AND BUDGETING
          • Overview
          • Dream Big, Save Smart: How to Set Money Goals
          • Who Needs a Budget? Well, Everyone—Even You!
          • Spending Reality Check: Do You Need It or Just Want It?
        • JOBS
          • Overview
          • Got Your First Job? Understand Your Paycheck
        • CREDIT AND DEBT
          • Overview
          • Spend Smart: How to Use a Credit Card the Right Way
        • COLLEGE
          • Overview
          • Financial Aid 101: How to Pay for College
        • INVESTING
          • Overview
          • This Cool Investing Feature Is the Key to Reaching Your Goals
          • How to Invest Like a Boss—As a Teen
  • Tools & Resources
        • TOOLS AND RESOURCES
        • Worksheets
        • Calculators
        • Spending Tracker
        • Monthly Budget Planner
        • Financial Fitness Quiz
        • Documents and Forms
          • Overview
          • Form W-4
          • Form W-2
          • Form 1099
        • Financial Glossary
  • Foundation
      • FOUNDATION
      • Moneywise America
Search

What to Do If You Lose Your Job

Don't wait—take action!

Our two cents

Two Cents icon

Our two cents

Plan ahead! If you think your job may be at risk, start storing up extra cash now to create an emergency fund.

Anyone can lose a job, for a variety of reasons, at any time. If you find yourself in this situation, you don't have to sit idly by. Take these seven steps right away to help ease the financial pain.

  1. Review your severance package before you sign.

    While the deadline to sign a severance package document can vary by age, state and employer, you typically have a few weeks to accept it and a few days after signing to change your mind. You may be able to negotiate a better deal, particularly if you're an experienced manager or an executive-level employee.

    Be sure you understand the terms. Are you giving up any rights? Are you signing a non-compete clause that may limit your options for finding a new job? Look online for some guidance or talk with an attorney.

  2. Apply for unemployment.

    The federal/state unemployment compensation program covers almost all wage and salaried workers. If you find yourself out of work through no fault of your own, you probably qualify. Eligibility and benefits vary from state to state. Typically, your benefit depends on your recent earnings. It's also important to note that unemployment income is taxable.

    Most states provide a minimum of 26 weeks of unemployment benefits but it could be less. Review your state’s labor employment laws for details. 

  3. Look into your COBRA rights.

    If you work for a company with at least 20 employees, you may be able to continue your group health insurance for up to 18 months after being laid off, thanks to the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986. Some states provide an extension of the federal provision for smaller companies or extend coverage in certain situations. For instance, in California, you may be eligible to continue coverage for an additional 18 months. 

    You will likely be responsible for paying the entire cost of the plan plus 2 percent, so be sure to do a cost comparison with other plans.

  4. Roll over your 401(k) account.

    When it comes to preserving your retirement savings, you have several choices. You can:

    • Make a direct transfer of your entire account balance to a  Rollover IRA. Your money can continue to potentially grow tax-free this way.
    • Get a check from your former employer and roll this over to an IRA. In general, this isn't a good idea because your employer will be forced to withhold 20 percent for prepayment of federal income taxes. If you're under 59 ½, you must rollover the check within 60 days or you will also be charged a 10 percent penalty. State income taxes and penalties may also apply.
    • Leave your money with your former employer. You'll still be tied to the investment choices in your former employer's plan, but you won't have to pay taxes or penalties.
    • Transfer your 401(k) assets directly to a new employer’s 401(k) plan. If you find a new job that offers a 401(k) plan and accepts transfers, you may be able to directly transfer your 401(k) assets from your former employer’s plan to your new employer’s plan. This is another tax-free option.
    • Cash out. If you just take the cash, you'll owe taxes on the entire amount, plus potential penalties depending on your age.

    This is an important decision, so weigh the pros and cons of each choice carefully.

  5. Create a budget and cut your spending.

    First, figure out what you're going to live on while you look for a new job. Severance pay? Your spouse's income? Unemployment benefits? Your emergency fund? 

    Then, look at your spending. Some expenses are necessities, like rent or mortgage, utilities, and insurance. But there are usually plenty of ways to reduce your outflow while you're searching for a new job. Decreasing unnecessary spending can help you stay within your means until your income recovers.

  6. See if you qualify for other forms of assistance.

    There are several tax benefits that might be available to you - from tax credits to the 0 percent capital gains and qualified dividends rate if your income is low enough. Check with a tax professional or go to IRS.gov 

  7. Look for a job!

    Start your job search right away. If there are few opportunities in your current industry, work on applying your skills and experience to another one. Take a part-time job. Freelance for a while if that's an option. The more initiative you take, the greater your chances are of finding a new job.

Keep learning

Keep Learning icon

Keep learning

Planning ahead is the best way to make sure you're covered if you lose or change jobs. And don't forget your 401(k)—there are plenty of ways to keep it growing during and after the transition.

  • Saving for an emergency.
     
  • 401(k) rollover options.
     
  • IRAs.
1124-68RH
  • About the Foundation
    • Foundation
    • Moneywise America
  • Money Talk
    • Money Talk
    • Planning & Goals
    • Investing Basics
    • Insurance
    • Education Savings
    • Couples and Families
    • Kids and Teens
    • Estate
    • Retirement
    • Major Purchases
    • Banking, Credit & Debt
    • Budgeting & Saving
    • Taxes
    • About Money Talk
  • Essentials
  • My Life
  • Teaching Kids
  • Tools and Resources

This information on this website is for educational purposes only, and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, you should consult with a qualified tax advisor, CPA, Financial Planner, or Investment Manager.

Charles Schwab Foundation is a 501(c)(3) nonprofit, private foundation funded by The Charles Schwab Corporation. It is not part of Charles Schwab & Co., Inc. or its parent company, The Charles Schwab Corporation.

© 2025 Charles Schwab & Co., Inc. ("Schwab"). All rights reserved. Member SIPC.

(0624-1EZE)