Clean up loose ends from work

• Review severance package
• File for unemployment
• Arrange to continue health Insurance, if needed
• Continue Life & Disability coverage, if desired
• Ask for letters of recommendation
• Ask employer about Dislocated Worker services

Manage
cash flow

• Update your budget
  • List all expenses
  • List existing sources of income
  • Explain situation to family; ask for suggestions
• Review discretionary spending
• Stop using credit cards
• Review automatic investment contributions
• Ask creditors to reduce or defer payments
• Check for assistance programs at www.aarp.org/quicklink

Start your
job search

• Tell everyone you know about your situation
• Network with others in your field
• Get job search tips at aarp.org/jobtips
• Update your resume and interviewing skills
• Obtain any certifcations in your field
• View finding a job as your new job
• Find a Department of Labor Career Center at servicelocator.org

Actions
to take

• Decide what to do with 401(k) plan assets
• Consult a professional financial advisor

Only as a last resort

• Tap into retirement accounts
• Declare bankruptcy

Things to do before leaving work

When you're laid off the most obvious loss is your paycheck. There are many other, less obvious benefits you will lose as well. A careful review of your employee handbook is in order to see what you've been taking advantage of that you may not remember — and determine what you can take with you.

A. Know Your Benefits

Benefits you may need to think about include: Health and Dental Insurance, Health Flexible Spending Accounts (FSA), Life and Disability Insurance; Pension, 401(k), Cash Balance Plan, Profit Sharing or Stock Bonus Plans; and Paid Time Off. To ensure you maximize whatever you're eligible for, ask these questions before leaving work for the last time:

• Can I continue my insurance at group rates?
• Will the employer continue to contribute to insurance premiums?
• How do I activate COBRA (continuation of health coverage)?
• What are the terms of the various savings plans and pension I participate in?
• Am I fully vested?
• How much is my benefit?
• When do I start receiving payments?
• How long can I leave my retirement plan with the company without incurring extra fees?
• How long do I have to repay loans I may have taken on retirement savings?
• Can I use accrued vacation time to extend employment benefit while looking for another job?

B. Maximize Your Severance

Even if you have a private office, work is the wrong place to review your severance package. You need to be able to concentrate on the details — without worrying about interruptions. You should take the package home, read it front to back, and compare it to your employee handbook. You may also want to get legal guidance. Negotiate, if you can, based on what elements of the agreement are important to you. Only sign once you're sure you're getting everything you are entitled to. Also ask about unemployment benefits, and if your severance impacts your eligibility.

C. Start Your Job Search

Even though emotions may be running high, it's important to keep a cool head at work and squeeze every last bit of value you can from your now-former employer. Here are a few tasks that may pay off as you transition:

• Ask for a letter of recommendation right away — before anyone else does, and while the boss still feels tied to you
• Ask for any job leads managers or colleagues/departments may have
• Ask about Dislocated Worker Services

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Manage Cash Flow

Without a regular paycheck, your income may be significantly less than you're used to. So you should probably consider making some changes in your expenses. There are many necessary ones — such as health insurance, car insurance, mortgage/rent and utilities that may really add up. But don't panic. Review your expenses and you may find there are a lot of other things that you can temporarily do without. A lot of them can probably be put on hold, at least for now.

A. Create an income and spending plan

The first step in maintaining financial security during unemployment is creating an Income and Spending Plan. The second step is sticking to it. So let's get started:

• File for unemployment compensation right away.
• List all sources of income you can depend on for the next few months. If you are 62, evaluate if it makes sense to file for Social Security. For those eligible to begin receiving retirement income from Social Security, contact the Social Security Administration for assistance with this process, http://www.aarp.org/money/social_security/planning_ for_soc_sec.html.
• Determine what level of spending you can afford, then list all expenses in two columns: required and discretionary — and be honest when making these lists. Remember, gas is required to get to interviews and the grocery store, but cable TV isn't.
• Stop spending on anything that's not on your "required" list.
• Don't stop paying your bills — ask creditors if they offer grace periods that allow you to defer payments or can offer any other ways of keeping current.
• Stop automatic investments for the time being — you can (and should) restart them when you have more income.
• Evaluate adjusting your spouse's tax withholding for more cash now rather than a refund later — get a W4 form http://www.irs.gov/pub/irs-pdf/fw4.pdf.
• If you have to tap into savings, withdraw money from low-interest savings accounts first — avoid triggering penalties from CDs or retirement savings plan.
• Check how part-time work will impact unemployment benefits before accepting low-paying, low hour jobs.

Use these credit card-specific tips:

• Don't use your credit cards to buy anything you can't pay off in full — high interest rates can be costly.
• If cash is really tight, just make the minimum payments — if you can afford more, pay more to avoid interest charges getting out of hand.
• Call your credit card companies and request a lower interest rate — sometimes you can get one just by asking.

B. Get Extra Help

C. Avoid These Actions (if you can)

While you may not be able to control your cash flow as much as you'd like during a period of extended unemployment, there are still a few things you should try to avoid as long as possible, as they may compromise your ability to get back on track quickly once you do land your new job.

• Try not to dip into your retirement accounts — although there is such a thing as a "hardship" withdrawal from 401(k) plans, it may be in your best interests to avoid one. You may have to pay a stiff penalty and you'll be depleting funds that may be required for retirement — which may be a much longer period of unemployment than this temporary one.

• Try to avoid filing for bankruptcy — unlike missing payments, which lowers your credit score and can stay on your report for seven years, bankruptcy badly damages your credit rating. And bankruptcy can stay on file ten years. Yes, you can recover. But it's much harder than if you merely had late payments of 60 days or under.

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Start your Job Search

We've given you a lot of tips on how to handle the financial impact of job loss, but the best way to recover is to find a new job. So you may want to start your search as soon as you know your job is in jeopardy — even before losing it, if possible.

Go to www.aarp.org/jobtips to find extensive information on how to prepare for and execute your job search.