Navigating a Layoff With Clarity and Confidence

Whether you’re facing a layoff, early retirement, or organizational restructuring, it’s natural to feel overwhelmed. But with the right questions, guidance, and financial strategy, you can approach the next phase of your life with greater confidence and control.

A recent report shows that U.S. employers announced 275,240 job cuts in March of 2025. This is a 60% increase from the 172,017 cuts announced one month prior.¹

That number is up 205% from the 90,309 cuts announced in the same month in 2024. That was the highest monthly total recorded last year.² While federal cuts led the March 2025 layoff numbers, workers in the tech and finance industries were also hit hard — showing that both public- and private-sector employees are feeling the impact.

If you’re among those impacted, here’s what to know and ask now — before making any financial decisions.

Start with the details of your separation package

Begin by clarifying what your employer is offering. This might include severance pay, unused vacation or sick time, or early retirement incentives. Get clear answers to questions like:

• Will severance payments stop if I accept another job?
• Will I continue to earn sick or vacation time during the notice period?
• Will my employer pay me for unused leave on my resignation date?
• Will I still earn pension credits if the offer includes a deferred retirement?

Whether you’re in the private or public sector, these details have long-term implications for your cash flow and retirement timeline. Government employees should also confirm whether unused sick leave will count toward pension calculations and consult with HR or the Office of Personnel Management (OPM) for additional guidance.

Understand your benefits coverage

Health and life insurance benefits are essential during any employment transition. If you qualify, you can keep your health coverage through COBRA. Federal workers can use the Federal Employees Health Benefits (FEHB) program. Federal workers may also have extended coverage through Temporary Continuation of Coverage (TCC).

Ask your employer whether your life insurance or disability coverage will continue, end, or convert. These benefits can be costly to replace on your own — knowing your options is vital to protecting your physical and financial well-being.

Explore your retirement plan options

Whether you’re enrolled in a 401(k), 403(b), or Thrift Savings Plan (TSP), it’s critical to understand your withdrawal and rollover options. A financial professional can help you:

• Avoid early withdrawal penalties (in some cases, early retirement may qualify for an exception)
• Roll over funds to an IRA or new employer’s plan without triggering taxes
• Compare investment options and beneficiary rules across accounts

While accessing your 401(k) after a layoff may seem like an easy source of funds, it’s important to weigh the pros and cons. Early withdrawals before age 59 ½ typically incur a 10% penalty, in addition to income taxes, though exceptions may apply. Tap into your 401(k) only as a last resort.

For TSP participants, consult the TSP Handbook or a retirement-focused advisor to understand how moving your account may affect your long-term planning and your heirs.

Evaluate your budget and income sources

What will your income picture look like post-layoff? If you’ve built an emergency fund, now may be the time to use it wisely. You may also be eligible for unemployment benefits or consider drawing Social Security if you’re of age — even if it’s earlier than you planned.

Filing for unemployment can provide a temporary income bridge, especially if you expect a lengthy job search. High earners should know that unemployment benefits are usually limited. These benefits may only cover a small part of your previous income. Additionally, benefits are generally taxable, so plan accordingly.

If you’re not yet retirement-eligible, part-time or freelance work can provide a helpful bridge. Now is also the time to scrutinize your budget. Cut back on non-essentials — think dining out, subscriptions, or streaming services — so you can extend your runway and focus on what’s next.

Consider your stock options

If you have stock options, ask your employer for documentation outlining your vesting schedule, expiration date, and post-termination rules. In many cases, you may have only 90 days to exercise vested options after your employment ends.

Selling too soon or waiting too long can have significant tax and financial consequences. It’s important to make decisions that fit with your overall investment and tax plan. A financial advisor or tax professional can help you navigate the complexities of incentive stock options (ISOs), non-qualified stock options (NSOs), or restricted stock units (RSUs).

Seek expert guidance and emotional support

You don’t have to navigate this transition alone. Talking to a trusted financial advisor can help you create a plan for your short-term needs and long-term goals. A skilled advisor can guide you through retirement planning, tax-efficient withdrawals, and smart investment decisions during this time of change.

If you’re a federal employee, be sure your advisor understands the intricacies of federal benefits, retirement programs, and TSP distribution rules.

And don’t underestimate the power of community. Take time to update your LinkedIn profile to reflect your experience and aspirations. A clear, professional presence can help attract recruiters or connections with job leads. Reach out to peers, mentors, or family members who can provide encouragement or a different perspective as you navigate what’s next. Tap your network for informational interviews, thinking about the skills you have and what aspects of your work you enjoy, and open your mind to exploring fields that might not be directly in line with your previous experience.

Plan ahead if a layoff may be on the horizon

Even if your job feels secure now, it’s wise to take proactive steps — especially in a volatile economy. Check your benefits, increase your emergency savings, and think about talking to a career coach or financial planner. This can help you build a stronger future.

Job loss can feel destabilizing, but it can also mark the beginning of a new chapter. With the right planning and professional guidance, you can make smart financial decisions that preserve your goals, protect your wealth, and help position you for long-term success.

At Mercer Advisors, our team is here to help you navigate this transition with clarity, strategy, and confidence. If you are a Mercer Advisors client and want more information, contact your wealth advisor. Not a Mercer Advisors client? Let’s talk.

¹ Challenger, Gray & Christmas, Inc. “February 2025 Job Cuts Surge on DOGE Actions, Retail Woes; Highest Monthly Total Since July 2020.” The Challenger Report, March 6, 2025.
² Challenger, Gray & Christmas, Inc. “Job Cuts Jump in March 2024 to Highest Total Since January 2023 on Government & Tech.” The Challenger Report, April 4, 2024.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. 

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors. 

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.