Preparing for a Job Loss

Conserve cash:

• If you are paying more than the required payment on your mortgage, auto or student loans, pay only the required amounts and conserve your cash for living expenses.
• Build liquidity for up to six months of expenses through checking accounts, money market accounts and (last choice) equity lines.

Plan ahead

• Consider whether it makes sense to refinance your home mortgage in order to reduce the payment
• Get an equity line of credit before you lose your job.
• Review your assets to determine which would be the best sources of liquidity, if needed.  Set up a plan for how you will liquidate assets if your six months of liquidity is depleted.

Medical Coverage

• Examine the options available through your employer.  
• Does severance package include ongoing medical coverage?
• What are the COBRA options

Other Insurance

• Is the life insurance portable?  If not, consider other sources for purchasing coverage (affinity programs or permanent coverage)
• Is the disability coverage portable?

Retirement/benefit Plans

• If you have a loan outstanding, consider how to repay.  If you take a lump sum distribution, the outstanding loan will be taxable and may incur 10% penalty as well.
• When is the employer match paid?  Does timing of your severance affect whether you receive the match?
• Will stock vest immediately or follow the existing vesting schedule?
• What options are available for the pension?  If possible, take a lump sum distribution and rollover so you don’t have to remember to call your former employer about the annuity when you reach retirement age

Other

• Determine eligibility for unemployment benefits through your state unemployment commission.
• Read the severance agreement and all other information from your employer!