One of the hazards of working through a layoff is getting trapped in binary thinking. It can be useful to approach this time as a design problem—generating and evaluating a range of alternatives rather than defaulting to a single path—including whether you need to keep working at all.

Some issues truly are time-sensitive, but many are not. A useful first step is to understand which is which.

Medical insurance coverage. What to understand: how long your employer will continue coverage; whether to cover yourself or your family under COBRA; whether to move to your spouse’s plan or Marketplace coverage.

A common misunderstanding about COBRA is that it is inherently expensive. By law, your employer cannot charge you more than 2% above their cost. However, employers are not required to continue subsidizing premiums, which is what makes it feel expensive. COBRA benefits normally last 18 months after a layoff, and the election window is generally 60 days.

Lump-sum vs. phased payouts; PTO payout. What to understand: For well-compensated tech professionals, a decision to take a lump-sum payout (if that’s available) can significantly increase taxes and should be weighed carefully against cash flow needs and future income.

Tax-year timing of payouts. What to understand: Whether payouts will all be paid out in the same tax year, or whether they can be spread across tax years.

Tax withholding. What to understand: how much you must withhold; how to benefit from minimizing withholdings and delaying tax payments without incurring penalties.

How payouts are characterized. What to understand: Some final payments may still be eligible for 401K deferrals, but true severance often is not. If deferrals are available, consider whether maximizing or reducing 401K contributions still fits your cash-flow, tax, and retirement strategy.

Exercising stock options. What to understand: time limits, tax consequences, implications for already-concentrated stock positions, implications for cash flow.

Vesting of RSUs. What to understand: what has vested, what has forfeited, whether vesting continues during severance, year-end timing, tax consequences, implications for your cash flow.

401K and other retirement assets. What to understand: Whether to leave assets in employer’s retirement plan, transfer to a professional advisor, or transfer to a self-managed account; whether layoff changes your asset allocation or tax strategy.

Are rule-of-thumb answers appropriate for you? What to understand: For highly compensated tech professionals, the best answers to these questions often depend less on your company’s policies and more on your personal circumstances: cash needs, tax bracket, family obligations, retirement readiness, concentration risk, and how much flexibility your wealth has created. Consider whether your finances have outgrown rule-of-thumb financial planning and would benefit from consulting a financial advisor.

After processing the initial shock of the layoff, senior tech people can find the layoff is as much about discovery as loss. For many people, this is also the first time they’ve seriously asked the potentially-liberating question, “Do I need to keep working?”

Short-Term vs. Long-Term. What to understand: What decisions must be made immediately, and which can be delayed; which decisions might benefit from being delayed.

Income. What to understand: how income changes over the short term (3 months, 6 months, 12 months), and how much it will change long term.

Assets. What to understand: whether assets are materially affected in the short term, or if assets are mostly a long-term issue.

Employment plans. What to understand: whether returning to work is an immediate need, or a longer-term question.

Life plans. What to understand: how the change in employment affects long-term priorities. Are there family priorities, bucket list items, or long-deferred interests that are now possible?

This is one of several situations we help tech workers navigate—see our page on financial planning for tech professionals for a broader overview.