4 steps to protect your finances

After a wave of big companies announcing steep job cuts, many laid-off workers may face a financially difficult and uncertain period ahead.

Amazon said on Tuesday that it would eliminate around 14,000 corporate positions, and the United Parcel Service, or UPS, said it had reduced its operational workforce by 34,000 jobs this year. On Wednesday, General Motors laid off roughly 1,700 workers, and Paramount terminated 1,000 people. The Trump administration has also threatened to fire thousands of federal workers during the shutdown, but those efforts have been blocked so far in the courts. 

“Now is a particularly challenging time to be unemployed,” said Michele Evermore, senior fellow at the National Academy of Social Insurance.

The Bureau of Labor Statistics didn’t publish its monthly jobs report in October because of the government shutdown. But analysts have been worried about the state of the employment market for months.

Despite the government shutdown, which began on Oct.1, states still have access to their state unemployment trust fund to pay out benefits, said Andrew Stettner, the director of economy and jobs at The Century Foundation.

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“Eventually they will run out of federal funds to pay the staff that process the benefits, but we’ve not heard of that happening yet,” Stettner said.

As a result, those who’ve lost their job should “immediately file” for unemployment insurance, Evermore said. Before you do so, you’ll want to gather the following information: your pay over the last 18 months, names of previous employers during that period and their addresses, your Social Security number, state-issued identification and any documentation from your last company.

If you live in one state and work in another, you’ll want to apply for the jobless benefits in the state where you worked, experts say. On a DOL-sponsored website, you can find the contact information for state unemployment agencies.

State agencies should pay benefits within three weeks of your application, but delays have become more common since the pandemic, Evermore said.

“It’s probably going to get worse as layoffs increase,” she added.

Maximum unemployment benefit amounts vary by state. For example, California’s maximum weekly benefit is $450; in Florida, the cap is $275, Evermore said. In most states, claimants can get benefits for 26 weeks, she added — although the benefits last for just 12 weeks in some states, such as Florida.

For many workers, losing their jobs also means losing their health insurance.

Your first step is to find out when your workplace insurance officially expires, said Christine Eibner, a senior economist at Rand Corporation. Some companies provide additional months of coverage under their plan after a layoff.

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Once your coverage lapses, you may be offered the chance to continue it under COBRA, shorthand for the Consolidated Omnibus Budget Reconciliation Act, said Caitlin Donovan, a spokeswoman for the Patient Advocate Foundation.

The option is “cost-prohibitive” for many people, Donovan said, because it requires them to pay the full premium, including the portion their company was previously paying. But if you can afford the price tag, it’ll cause the least disruption to your coverage. COBRA is usually available for between 18 months to 36 months, according to the Department of Labor.

Other options for getting new health insurance include enrolling in a spouse’s plan or seeking subsidized coverage on the Affordable Care Act Marketplace or through Medicaid, Eibner said. Those who’ve lost their employer health benefits typically have 60 days to sign up for an ACA Marketplace plan, Eibner added. (Open enrollment on the marketplace for 2026 starts on Nov. 1 in most states.)

At the heart of the current stalemate in Washington is whether or not to extend Covid-era enhanced tax credits for ACA marketplace enrollees. Those enhanced subsidies make health insurance premiums cheaper for tens of millions of Americans. Without that aid being extended, many people will see higher prices for marketplace coverage in 2026.

“However, the tax credits aren’t going away completely,” Eibner said. “They are just reverting to the original levels put into place under the Affordable Care Act.”

Medicaid is the cheapest health-care option and may actually cost you close to nothing, experts said. Eligibility is based in part on your current income, which may allow many newly unemployed workers to qualify — although jobless benefits may have an impact.

If your company offered a retirement account, you’ll need to decide what to do with that nest egg now.

You may be able to simply leave the money in the account, even though you won’t be able to contribute to it anymore or benefit from any employer match.

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“This is a great option, especially if the funds in the account are strong and if the employee needs time to focus on other things,” said Dana Levit, a certified financial planner and the owner of Paragon Financial Advisors in the Boston area.

An exception: If you have less than $5,000 in your workplace retirement account, your employer may require that you move the funds.

You may also be able to transfer your funds without taxation or penalties to another qualified retirement plan, including a 401(k) at your next company if that’s allowed, or to an individual retirement account, Levit said. If your former employer isn’t forcing a transfer, there’s no need to rush into this decision.

While cashing out your 401(k) is another option, it’s not a desirable one, Levit said: “The distribution is taxable as ordinary income,” and “depending on the employee’s age, there could also be penalties for an ‘early withdrawal.’”

Laid-off workers who have an outstanding loan from their 401(k) may face an extra headache, Levit said.

“401(k) loans are typically due in full at termination,” she said. “If they are not repaid, the outstanding loan will be considered a taxable distribution subject to ordinary income taxes and potentially penalties.”

But it’s worth talking to your plan administrator and learning what your options are, Levit added: “Some have flexibility about continuing payments even after termination.”

People who’ve lost a job and are worried about their student loan bill have options, too. You can enroll in an income-driven repayment plan that sets your monthly payment based on your earnings and submit proof that you’ve lost your job; while unemployment benefits will count as income, you’re likely to get a low payment and some may not owe anything under their plan’s terms.

The U.S. Department of Education also offers an Unemployment Deferment, in which you can possibly pause your payments for up to three years after a job loss. Some student loans will still accrue interest during the payment pause, while others will not.

During a period of joblessness, you should ask other lenders “for a break,” said Ted Rossman, a senior industry analyst at Bankrate.

“Many lenders have hardship programs that allow you to skip a payment or rearrange a due date,” Rossman said. “Lenders are often willing to work with you, especially if it’s something temporary like a government shutdown, job loss or natural disaster.”

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If you can manage it, making at least the minimum payments on all of your debts will avoid the start of any collection activity and possible risks to your credit, Rossman added.

On top of taking care of your finances, it’s also important to tend to your mental health after a job loss, Evermore said. That might mean sharing what you’re going through with others, including family, friends and a therapist.

“Unemployment is one of the most stressful things that can happen to a person, so be mindful of the fact that you are not alone,” Evermore said. “There are people who want to help you through this challenging time.”