How to Navigate a Career Transition
Recent mass layoffs in the tech industry have some high-earning employees worried about their future job security. After all, no one is immune to layoffs — not even those who occupy the C-suite. If you find yourself a victim of layoffs, try not to panic. You’ll likely be okay. The following steps can help you take back control of your career and earnings.
Step #1 – Relax.
Receiving notification that you’ve been laid off can bring on a wide range of emotions. You may feel stressed, anxious, hurt, embarrassed, fearful or just plain mad. Whatever you’re feeling is okay and normal, but try not to let your emotions run away with you. Take a few days to relax and disconnect from your previous job. Participate in activities you enjoy that you can’t normally do with a full-time job. Spend time connecting with family and friends.
When you’re ready, start planning your next move. What types of jobs will you apply for? Is now the time to shift industries or switch to a different type of position? Maybe now’s the time to start up your own business venture. Whatever you decide, let your goals guide your search process.
Step #2 – Connect with HR.
Once you’ve recovered from the shock of your layoff, it’s a good idea to tie up any loose ends with your former company’s human resources department, including the following:
- Ensure any payout for unused vacation and/or sick days is accurate.
- Ask about your health insurance options, such as COBRA coverage.
- Make sure you have the correct contact information for all benefits providers, such as your 401k recordkeeper.
- Make a plan to return any company-owned technology and equipment.
- Schedule a time to pick up any personal items still at the office.
- Determine if you’re eligible to convert your group life insurance policy to a personal policy if you may have challenges qualifying for a term life insurance policy on your own. Oftentimes converting a group policy doesn’t require medical underwriting; however, the cost of insurance may be higher than if you’re able to qualify to purchase a policy on your own.
Step #3 – Understand your severance package.
In addition to wrapping up the loose ends mentioned above, you’ll want to work with your HR department to understand, and potentially negotiate, your severance package.
A typical high earner’s severance package includes a one-time lump-sum payment. Oftentimes, the amount of this payment is correlated to an employee’s years of service at the company. The longer you’ve been with the company, the more you may be eligible to receive. You may also be eligible for a continuation of your employer-sponsored healthcare and possibly some form of career transition support.
Remember that your original severance package offer may not be set in stone. You have a right to negotiate the terms of your severance, just as you negotiated your compensation when you took the job.
Step #4 – File for unemployment.
It’s important to file for unemployment as soon as possible. The sooner you file your claim, the sooner you can begin receiving benefits. As a high-income earner, you may feel uncomfortable asking for government assistance, but remember that this program exists for the benefit of all taxpayers. Accepting unemployment benefits can prevent you from having to dip into your savings to support yourself and your family, which can be a big benefit to your long-term financial security.
Step #5 – Evaluate your stock options.
Many high earners at publicly traded companies receive some portion of their compensation in the form of company stock options. It’s important to understand the specifics of these investments, including how long you have to exercise the options as well as any non-vested stock awards you will have to forfeit.
Step #6 – Make a plan for your 401k.
Work with your wealth manager to decide how to handle assets in your employer-sponsored retirement plan. You may be eligible to make one last contribution with your final severance payment, which can be a smart move if that contribution is eligible for an employer match.
You’ll also want to determine whether it makes sense to keep your assets in the current plan or if you should roll them over to an account in your name. Remember that if you decide to take a distribution from your account, you’ll be responsible for paying ordinary income taxes and, potentially, an early withdrawal penalty.
Step #7 – Review your emergency savings.
Make an effort to review all sources of emergency savings and determine how long you may be able to support your family without a steady source of income. Don’t feel guilty about dipping into this source of savings. After all, this is exactly what it’s there for.
Your wealth manager can help you navigate this challenging time and ensure your family remains well cared for throughout your career transition. Reach out early in the process for assistance with the steps listed above. At Creative Planning, our teams are here for you no matter what challenges life throws your way. For more information, schedule a call with a member of our team.
