Losing Your 6-Figure Job? Use These Financial Strategies to Come Out on Top
Executives navigating layoffs and buyouts have some critical decisions to make. Here's what they need to consider.


A large number of Fortune 500 companies have recently announced layoffs — from Disney’s ESPN unit to PepsiCo to General Motors. Even educational institutions like The University of California-San Francisco are making cuts. Most of these are involuntary layoffs, meaning positions are cut and people are likely to lose their jobs. Voluntary layoffs, where employees can choose to take a buyout, have also been announced at other major employers, such as Boeing and Fidelity Investments.
Learning that your job has been eliminated is an incredibly stressful moment. On top of that news, many people need to make major decisions involving their money in a short period, such as whether to try to find another job at that company or take the severance package. These decisions can be overwhelming for the most seasoned executive.
Once a person has been informed that their job is gone, the first step is to take a deep breath and clear your head. It’s natural to be angry or feel resentment for a few days. But it’s important to focus on the future, read the details of your severance package and run the numbers.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
I’ve worked with several corporate executives who have lost their high-paying jobs and to help ease the financial burden, I suggest the following three-step decision-making process.
Step One: Determine the length of time that you will be able to pay your bills and maintain a healthy lifestyle.
I start by calculating the amount of money in the executive’s nest egg and the severance benefits they’ll walk away with. My analysis includes answering these questions:
- After taxes, how long can the person live from the cash in their bank account plus their severance check?
- How much savings is in their retirement accounts? What funds can be tapped without major tax consequences if money is needed in the next few years?
- Do we need to restructure the executive’s financial portfolio to boost cash and other liquid assets?
- What are the debt payments due and other fixed monthly expenses? Are there areas where spending can be reduced?
Step Two: Take a mid- to long-term view of your financial plan.
These questions include:
- Is there enough money saved to retire today when the severance pay is included?
- If not, how much must they earn in a new job? And how much longer do they need to work to meet their retirement goal?
- What other financial obligations are still outstanding? Do they need to pay for a child’s college education or plan for long-term care needs?
- Is moving to a new job in a different state likely? Laws governing income and estate taxes vary by state, so determine how your income will be affected and update your will.
Step Three: Make key time-sensitive financial decisions about leaving the company.
- Severance strategy. A number of executives receive six-figure severance packages, so how should they spend, save and invest these funds? While this money may feel like a windfall, it’s a great opportunity to boost their progress toward retirement or college savings goals. Next, be sure there is enough money in the emergency fund; if a person needs to find another job, they should consider having at least 12 months of living expenses in cash.
- Company stock. For many executives, stock options and restricted stock grants in their former company are their largest assets, so it’s important to develop a plan for how much stock to keep or cash in. A guideline I use is to have enough diversified assets outside of company stock so their core lifestyle can be funded for the rest of their lives without the risk of owning too much in one single stock. The taxes owed on any grants cashed in may be considerable, so speak with a tax adviser before making this decision.
- 401(k) savings. These funds can be left with the executive’s former company, rolled into a new employer’s plan or an Individual Retirement Account (IRA). For anyone who leaves their company between the ages 55 and 59½, consider leaving part of your 401(k) plan intact if you think you may need to tap this money soon, because the IRS lets those departing workers make early withdrawals without subjecting them to the usual 10% penalty. And if there is after-tax money in your 401(k) plan, you may be able to roll over part of your 401(k) into a Roth IRA, which can provide income-tax free withdrawals during retirement
- Pension. If your former employer still offers a traditional pension plan, whether you take a lump sum or a monthly annuity could be the most important decision you ever make regarding your retirement. Everyone has different needs, but most people who are married, in good health and between 55 and 65 choose the monthly annuity. Those with significant assets or other company pensions, are going back to work for several years, or have major health issues may want to roll the lump sum into an IRA, deferring the taxes.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College” and “Girl Talk, Money Talk II, Financially Fit and Fabulous in Your 40s and 50s". She is the Practice Area Leader for corporate professionals and executives at wealth management firm CI Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner, cyclist and supporter of charitable causes focused on homeless children and their families.
-
Over 50 and Still Paying Student Loans? Here's Some Help
It's the club no one wants to join. But if you are over 50 and still paying student loans, there are ways to tackle both debt and retirement savings.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)
Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)
Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your Business
Selling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build Wealth
Consistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key Pieces
If retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?
If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or Relocate
Homeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and Friends
What starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What Happens
Combining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.