Severance, Sanity, and Next Steps: What I Learned When I Was Laid Off
The day I got the news, my brain went foggy. If you’re here, maybe yours did too. This guide is the one I wanted in that moment: plain-language answers, small steps, and permission to slow down while you decide what’s right for you. First things first, take a deep breath.
What a severance package is…and isn’t
Severance, simply put, is a cushion. If you’re laid off, your employer may offer extra pay and short-term benefits (like health coverage) to help you stay on your feet while you look for your next job. It’s common in layoffs but not guaranteed, and what’s included can vary. Think of it as a bridge, practical support for a tough moment, so you can breathe, plan, and move forward.
The size of a severance package often depends on how long you’ve been in the job, the level of your position (were you an entry-level analyst or senior-level manager?), and company policy; 1–2 weeks per year is common, more is generous.
My story:
Role & tenure: Deputy Director; 15 years in federal government.
What was offered: 21 weeks of severance, annual leave payout, 30-day extension of health insurance at no cost.
One surprise: health insurance and vision/dental had different termination timelines.
Should you accept right away?
Short answer: for my federal government friends, severance isn’t something you negotiate after a layoff, it’s set by law. In other sectors, usually, you’ll accept what’s offered and move forward, especially if severance isn’t guaranteed by contract or law. But there are two big exceptions:
You believe you have a strong legal case (discrimination/wrongful termination). Talk to counsel first.
The agreement includes terms that could harm your career (e.g., a restrictive non-compete). Know your state rules before signing.
You don’t have to decide under pressure.
Unexpected layoffs are common, and so is pressure to sign immediately. You’re allowed to read, reflect, and consult a pro. If you need an extension, ask politely and note you’re securing legal review.
If you’re 40+: U.S. law gives you more time—typically 21 days to consider (45 days for group layoffs) and 7 days to revoke after signing.
Negotiation: when it’s worth asking
For most roles, countering is hard post-layoff. But targeted, respectful asks can be reasonable, especially around health coverage timing or neutral reference language, and particularly if you have specific circumstances (e.g., ongoing medical care). Keep your request(s) brief and specific.
Taxes, unemployment, and timing
Taxes: If severance is paid like normal paychecks, it’s taxed like wages. If paid as a bonus/lump sum, federal withholding is typically at a flat rate (often 22% at time of writing). Plan for that in your budget.
Unemployment: Rules vary by state. You can often claim after severance runs out but apply promptly since processing takes time.
Make the money last: a 30–60 day plan
Map cash in/out through your severance end date.
Decide on health coverage (COBRA vs. marketplace). Did you know COBRA is retroactive? Something to consider if you are concerned about any lapse in health insurance coverage and out of pocket costs.
List essential bills and upcoming expenses over the next 90 days. Identify any non-essentials you can pause.
Set a weekly rhythm (admin, applications, networking, rest).
Quick checklist
☐ Confirm last paycheck, severance amount, and payment timing.
☐ List benefits and deadlines (health coverage, payout of PTO, HSA/FSA, life/disability).
☐ Read legal terms (NDA, non-disparagement, non-compete); note questions.
☐ If 40+, note your 21/45-day consideration window + 7-day revocation. Add the dates to your calendar.
☐ Decide: accept as-is vs. a targeted ask (keep it to one specific request).
☐ Apply for unemployment (state rules vary).
☐ Build a 60-day budget + health coverage choice.
☐ Request written references.
A gentle reminder
You’re not behind, you’re in between. Slow the process down, ask for time, and protect your future self. If a clause feels off, it’s worth a question. If the offer is fair, it’s okay to accept and move forward.
Remember to take a deep breath – you’ve got this!
Disclaimer: This is general education and my personal experience—not legal, tax, or HR advice. Policies and laws vary by state and employer; consult a qualified professional for your situation.
