was successfully added to your cart.

pay severence advice

Image by iosphere via FreeDigitalPhotos.net

If you are lucky enough to receive a severance package when downsized, it is imperative that you make a plan for the money and also for your job search.

Too often I see stories like that of Dan.

When Dan’s employer passed out pink slips, he got a nice severance package.  Two weeks pay for every year of service and he had been with the company for 20 years.  Forty weeks of pay seemed like a lot at the time, so Dan took a few weeks off to do nothing.  Then he got a little busy and decided to buy a new computer and take advantage of the outplacement package offered through his former employer.  The outplacement firm helped Dan with his resume and gave him some general job hunting tips, but they were not set up to give him personal one-on-one coaching nor able to help him with how to transition into another career where he might not have direct experience.  Since he had not looked for a job in 20 years, he played a little in the job hunting websites, but mostly found himself picking up the kids from school, taking his elderly mother to the doctor and even doing the weekly shopping.  Instead of establishing an hour or two where he focused on his career campaign, he found himself watching TV, reading a few novels, and then found himself sucked into the black hole of playing computer games until the wee hours of the morning.

While Dan “played” in an effort to give himself a break from reality, his stress level continued to grow.  By the time Dan came to see me, he was sitting on one week of severance pay before it was gone.  Obviously, he was more than just a little panicked, and although his one good career decision was to seek out professional help, unfortunately, he had wasted valuable time and money.

If you have recently received a severance package and don’t want to make the same mistakes as Dan, the following questions will help you sort it out:

Severance Package Question 1: I received a severance package, but can I really afford to take time off?

That is the million dollar question.  Can you afford to take the time off?  Look at your situation and your financial obligations.  Keep in mind that the average time to find a job right now can be at least eight months, (depending on the level of demand the market has on your career target).

Severance Package Question 2: Even with a severance package, should I consider a stop gap job?

It may be necessary to find something to stop the hemorrhaging.  Stop gap jobs, in general, are low paying jobs that force you to take deep cuts into your budget.  At times it could require you to make some life changing decisions.  However, with a severance package to help offset the lower pay, this may be an option.

Severance Package Question 3: Is it really smart to waste part of the severance package to pay for help in my job search?

Some job seekers need the direction and support.  A coach can give them that.  Most appreciate the moral support received from an unbiased, profession resource.  If you’d ever like my assistance, reach out to learn more.

Join the discussion One Comment

  • Lisa says:

    Also be sure to mention that lump sum severance packages are taxed to the hilt.
    My 11 weeks of pay was taxed at 41% between federal and state. That’s almost half of what I was supposed to live on for three months. You may be able to recoup some of that tax the following April, but when you need it most, it’s gone. Also, you are expected to pay 10% federal income tax on your unemployment benefits. You can opt to have that taken out weekly on each check or not have it taken out until the following April tax deadline.Your state will also tax your unemployment benefits. So don’t think all of that money is yours…there are many large hands in the pot!