Please ensure Javascript is enabled for purposes of website accessibility

Do This After Losing Your Job

By Daniel B. Kline, Selena Maranjian, and Maurie Backman - Updated Jul 27, 2017 at 2:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Getting laid off or fired can be traumatic, but no matter how painful, you need to handle it well.

Losing your job can be a punch to the gut.

Whether you saw it coming or got blindsided, being out of work can rob you of your identity. That can lead to a period of wallowing, self pity, and general unproductiveness.

It's OK to take a moment to be sad. If you got laid off from a position you enjoyed or even got fired from one you didn't, it can shake your world view. However, it's important not to let self-pity take over and to get up off the couch.

It may not be what you want to do, but if you lose your job, you owe it to yourself and anyone who depends on you to find a way to move forward. More importantly there are things you need to do in order to insure your future and that you get back on your feet as quickly as possible.

A woman puts her head down on her desk.

Losing your job can be depressing, but it's important to not wallow in self pity. Image source: Getty Images.

Keep your 401(k) account alive 

Selena Maranjian: A common mistake many people make when they leave a job is cashing out their 401(k) account. That can seem inconsequential, but it's not. Maybe you think that because you only worked at the company for a few years and you only have $20,000 in the account that you won't miss out on much retirement money by cashing that out. You'd be wrong, though.

Imagine that you're 40 years old, leaving a job with a 401(k) account that has $20,000 in it. If you're planning on retiring at 65, that money could grow for you for 25 years -- quite a long time. Here's what it might grow to, at different average annual growth rates:

$20,000 Growing Annually by:

In 25 Years Becomes

8%

$137,000

10%

$217,000

12%

$340,000

Source: Calculations by author.

See? That seemingly modest sum could turn into an extremely useful sum, come retirement. Even the $137,000 could generate more than $5,000 annually to you in retirement.

You don't have to leave your money in your former employer's 401(k) plan. You can roll that sum over into an IRA, where you'll have more investment options than just the handful of funds offered by the 401(k) plan. (Still, a simple, low-fee broad-market index fund such as one that tracks the S&P 500 is one of the best options for most of us.)

It's also possible you might also be able to convert your 401(k) money into an annuity that will pay regular sums monthly in retirement. If the annuity is from a highly rated insurer, it's like buying almost-guaranteed income that can help you sleep better in your golden years. Just be sure it's a fixed annuity and not a variable or indexed one, as those are more problematic.

Don't cash out your retirement accounts early. Most of us will need all the income we can generate when we're retired. Social Security, recently averaging about $16,000 annually in retirement benefits, isn't likely to be enough.

File for unemployment

Maurie Backman: Losing a job can be a shocking experience that throws you for a major loop. But before you get too caught up in the self-pity game, make sure to log onto your state's labor department website and file for unemployment benefits. As long as you weren't fired for cause, you should be eligible for weekly benefits based on the wage you were earning.

Now the amount you'll get out of unemployment will vary depending on where you live, as each state has its own maximum benefit. Furthermore, you may be subject to a waiting period between the time you first file for benefits and when you receive your initial check. That's why it pays to file for unemployment as soon as your working arrangement is terminated.

Keep in mind that while those unemployment benefits will help you pay the bills as you look for work, they're not meant to replace your old paycheck in its entirety. And if you were a higher earner, you may come to find that your benefits only cover a fraction of your previous salary. Still, any money you can get your hands on is better than no money at all, so be sure to claim the benefits that are rightfully yours.

Work your network

Daniel B. Kline: Losing a job can cause some people to retreat from the world. It's easy to understand why someone would not want to be social in that situation, but it's self-defeating behavior.

Once you become unemployed it's important to let the world know you're on the market. You should present your availability as an opportunity for yourself and the companies that may hire you. You never know when someone in your network -- maybe a close friend, or even a casual acquaintance -- will be able to open a door for you.

In addition, assuming you were laid off not let go for performance reasons, you should also enlist your former bosses in your search. Do this by sending a thank you note for all that they did during your time at the company. Focus on the positive and remember that a good recommendation may help you land your next position.

Use your social media platforms to broadcast your availability while also reaching out personally to anyone who may help. This need not be overly formal. A simple email to friends, former colleagues, and work associates letting them know you are on the market should be enough.

Keep it personal though and don't send a mass email. Take the time to connect with people one at a time and you may be surprised at who eventually helps you get back into the workforce.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.