Northwestern Mutual

Losing Your Job

Minimize the impact of a job loss on your family's financial security.  

Losing Your Job

Losing a job can take a toll on your ego. But it doesn't have to take a toll on your financial security. There are steps you can take to lessen the impact of temporary unemployment and protect the financial well-being of you and your loved ones.

Start by evaluating your family's financial situation. Look closely at your income versus expenses, and make a realistic assessment of your financial security.

Over half of Americans put cable and cellphone bill ahead of life insurance

Hold a family meeting.


  • What are the family’s priorities?
  • What luxuries can you do without?
  • How can each family member help out?

Determine how long your emergency fund will last.

If you are short on funds, you may consider borrowing from your life insurance policy or retirement account for short-term cash needs. But before tapping into these funds, consult with a financial professional. When you borrow from your life insurance, your death benefit will be reduced. And if you borrow from your retirement account, you may have to pay a penalty. Look for other sources of income first.

Ask if you are entitled to severance pay and health insurance benefits.

Apply for unemployment insurance immediately after losing a job. Waiting may reduce your benefits. Most employers offer temporary health insurance benefits under COBRA. There may also be less expensive options that would, at a minimum, allow you to protect yourself in the event of a major accident or illness.

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Decide what to do with your qualified retirement plan, such as a 401(k) or a 403(b).

One of the decisions you will need to make when leaving a job is what to do with your retirement plan. You'll want to consult with a tax or financial professional before making the decision. Some options include:

  • Leave the balance where it is.
  • Roll over your balance into another qualified retirement account, such as an IRA or a variable annuity.
  • Roll it over into a new employer’s 401(k) plan.
  • Take the cash (and accept the penalty, if you're under the age of 59 1/2).

Get expert help.

There are many decisions to make after losing a job, especially when that transition comes abruptly and without warning. Keep your personal financial goals, such as saving for retirement, top of mind. A financial professional can offer suggestions to keep your financial plan on track.

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