12 ways to handle a layoff

By MarketWatch

You might think the holiday season would signal a holiday from layoffs, but that's not always the case.

Companies have announced thousands of job cuts just since Thanksgiving, including about 2,200 by Pfizer and 7,000 from the closure of 20 hospitals in New York, according to a news release from Challenger, Gray & Christmas, a global outplacement firm that tracks job-cut announcements.

You never really know when a layoff might be coming, and you probably don't want to spend your day focusing on the likelihood of such an event, but it doesn't hurt to take some steps to make sure you're not blindsided.

"It's prudent for all of us to monitor where we're at and where our companies are at and to maintain our contacts outside of the company," said Andrea Cope, the president of the San Francisco chapter of the California Society of Certified Public Accountants.

Keep your eye on what's happening to make sure you're as prepared as can be, Cope said. That requires "looking at the big picture," she said. For instance, "are your competitors cutting back? Usually, industries follow suit," she said.

Other signs of a potential layoff include cost-cutting efforts, hiring freezes, management resignations and travel cutbacks, she said. Though these don't always signal impending job cuts, it doesn't hurt to stay on top of the situation. The following 12 steps can help.

Being prepared

Save six months' worth of living expenses. You want to "make sure that should something happen, whether a layoff or a disability or some kind of emergency leave, you've got access to funds," said Matthew Schulte, a senior vice president at eMoney Advisor, a Philadelphia firm that builds technology and tools for financial advisers. Storing that money in a savings or money-market account means you won't face the tax and potential penalty hit of pulling money from a retirement account.

Keep your résumé and network contacts up to date. "That may be something you might regularly review so, should something happen, you're not dealing with something that's 10 years old," Schulte said.

Schedule medical or dental work while you still have health insurance. "If you've got that gut feeling (of a possible layoff), that's a great opportunity to schedule any medical or dental work," Cope said.

Organize your financial records. "A lot of times people have those things scattered in any number of different places," Schulte said. When trying to organize your finances, "if you can look something up, make a quick phone call, (that's) much less stressful than running around the house, looking in the safe-deposit box, this drawer, that file in the office. When you're dealing with all the other stress and family tumult around a layoff, that is stress you don't have to deal with."

Facing the layoff

Try to negotiate a better severance package. "Some (employers) will negotiate," Cope said. "The more senior the people, definitely. The more rank-and-file, it might be more difficult. It might be just based on the number of years you've worked there. If you don't ask, you won't know. The worst they can say is no."

Ask for one more day. "Most health-care coverage is for a whole month. If you get laid off the first of the month, you'll have coverage for the whole 30 days," Cope said. If you're getting laid off at the end of the month, consider trying to negotiate for one more day of work to get that extra month of insurance, she said.

Leave on good terms. "You never know when that president or CFO goes to another company and you're looking to hire on with that company. Just don't burn bridges," Cope said.

Get a recommendation. "Especially if it's a mass layoff and really has nothing to do with your job performance . . . get a letter of recommendation explaining that so you can use it in your next job interview," Cope said.

Consider signing up for COBRA. This allows you to continue your health-care coverage. You've got 60 days after your employment ends to sign up, Cope said. However, you'll pay the full premium plus an administrative fee, and that usually adds up to quite a bit more than you paid when your employer shared the cost.

Roll over your retirement plan. Make sure you roll your money into an individual retirement account using a trustee-to-trustee transfer to avoid any penalty or tax hit. "Don't take a check," Cope warned, or you could be subject to taxes.

If you're short of cash, tapping your retirement accounts should be "a choice of last resort," Schulte said. Still, he noted, such withdrawals become necessary at times. If so, check to see whether you qualify for your plan's penalty-free hardship withdrawal (though a job loss is often not covered).

Even if money's tight, resist using credit cards. Plus, if a big annual insurance payment is nearing, consider switching to smaller monthly or semiannual payments to avoid an immediate big hit to your pocketbook, Schulte said. And if necessary, put a hold on any automatic savings plans.

Watch your budget and expenses. Reduce your discretionary expenses. If you get, say, a six-month severance-pay package, assess your budget, Schulte said. "If you made some tweaks to your budget, could you stretch that to eight or nine months?"

This article was reported and written by Andrea Coombes for MarketWatch.