Introduction

Technology professionals tend to change employers more frequently than those in many other industries. Median tenure in tech is usually around 2–3 years, compared to 4–5 years in other industries. Younger professionals (especially software engineers, data scientists, and product managers) often switch even more frequently, seeking higher pay, better growth opportunities, or new challenges. Software developers have the lowest average tenure at 1.5–2 years. Executives and senior leadership are relatively higher, averaging 4–5 years with one employer.

The primary contributing factors to this high velocity and turnover are:

• Competitive Market: High demand for skilled professionals means more offers and opportunities
• Career Growth: Rapid changes in technology create new roles, encouraging professionals to move to gain new skills
• Compensation: Job hopping can often result in significant pay increases compared to staying put
• Work Culture & Flexibility: Many switch employers to find better remote/hybrid arrangements or healthier work-life balance
• Burnout & Job Satisfaction: Tech can be demanding, so professionals leave roles that aren't sustainable

The "Great Resignation" and shift to remote work have accelerated turnover, making job switching even more common since 2020.

Recently, as companies embrace increased capital expenditure to build out AI infrastructure and future verticals, layoffs at a number of major tech employers have increased notably. This is especially true for senior leadership and managerial roles, which historically had shown higher retention comparatively.

If I Recently Changed Technology Employers or Was Laid Off, What Financial Decisions Do I Need to Make?

1. What income or unemployment decisions should I consider after a layoff?

• Severance Package: Review carefully. Check how many weeks/months are covered, and whether benefits (like health insurance or stock vesting) continue.
• Unemployment Benefits: Review if severance pay may impact the amount of unemployment you receive. For example, in Washington State, if you receive a lump sum severance this can affect the amount of unemployment you get for that week. Severance should be reported when filing for unemployment to avoid over-payments or penalties. Apply as early as you can, and consider consulting the Employment Security Department or a legal professional to ensure you are reporting correctly.
• Emergency Savings: Decide how much of your savings you'll allocate for day-to-day expenses. A typical safe runway is 3–6 months, but adjust based on your role's rehiring timeline. More senior roles may require more runway before securing a new role.

2. How do I ensure I have health insurance after a layoff?

• COBRA: Lets you keep your employer plan (often expensive)
• Marketplace / ACA Plans: Compare on Healthcare.gov—you may qualify for subsidies after job loss
• Partner/Spouse Coverage: If applicable, explore adding yourself to their plan

3. What do I do with former employer retirement plans after a layoff?

401(k) options include:

• Leave it with your old employer (often fine short term)
• Roll it into an IRA for more control and fewer fees
• Roll it into a new employer's 401(k) when you land your next role
• Avoid cashing out unless absolutely necessary (penalties + taxes)

Stock Options / RSUs: Check deadlines for exercising vested options (sometimes only 90 days after termination).

4. How should I budget or manage expenses after a layoff?

• Optimize Your Expenses: Running a tighter budget during a period of unemployment increases your flexibility to mitigate the negative impacts of a layoff on your long-term financial health. Review all of your fixed expenses to see what you can remove.
• Postpone Variable Expenses: Almost everyone has luxuries built into their regular spending or one-time larger expenses they are expecting. Evaluate if you can temporarily stop the luxuries, like a house cleaner or lawn care, or postpone the larger expenses, like an upgrade to your home.
• Understand Your Budget: Knowing your monthly cash flow makes planning for expenses while unemployed considerably easier. If you need to raise cash from your investments after your severance and unemployment run out, you need to know how much you will need to avoid over-selling or selling haphazardly.

5. How could my taxes change after a layoff?

• Severance Pay: Treated as taxable income. Lump sum severance is often taxed at a higher withholding rate. Connecting with a financial advisor or CPA to understand the amount of excess withholding and how that fits into your cash flow plan or offsets other taxes is prudent.
• Unemployment Benefits: Taxable in most states—plan for next year's tax bill. Typically, no taxes are withheld, so planning for how to cover these taxes is important.
• Stock Sales or Option Exercises: May trigger capital gains or AMT—worth consulting a tax advisor if equity is significant. You may also be in a different bracket than normal depending on when in the year you are laid off, the amount of the severance, and how long it takes to secure a new job. As a result, you may want to select lots to trade differently than you would in other years where you are employed throughout.
• Roth Conversion: Lower income in a given year could warrant evaluating a Roth conversion of your pretax assets. Layoffs may put you into a lower tax bracket than you expect to normally be in while fully employed. A tax advisor and/or financial advisor should be consulted to evaluate if this decision makes sense and how much you can convert under favorable tax circumstances.

Other Considerations Following a Layoff

• Job Search Costs: Some expenses (like moving for a new job) may have tax considerations
• Upskilling/Training: Decide if investing in certifications or courses is worthwhile. Your employer may also provide access to additional training or upskilling as part of their severance package.
• Side Income: Consider freelancing or contracting—both for income and keeping skills fresh. Many tech professionals have side projects.

How Long Is It Taking Tech Professionals to Find New Jobs?

The employment market within the technology sector has shifted notably over the last 2 years. With increased layoffs, we are seeing increasing competition for new positions. Results vary based on experience level and area of expertise. We have seen a number of clients in the Pacific Northwest, especially with specialties like UX Research, take roles with net decreases in total compensation or notably longer periods of unemployment than was historically normal.

Conducting some scenario mapping of your retirement plan with a decrease in income or a longer period of unemployment in the short term than you may have experienced in the past is a prudent way to better understand the implications of these market trends.

What Are We Seeing That Helps Clients Secure New Roles?

Of all the clients we have helped navigate layoffs in the last 24 months, nearly everyone who found a new role leveraged a connection. We encourage all our clients who are laid off to update their LinkedIn and scan their connections employed at local employers. Engage with these connections and notify them that you're actively looking for opportunities.

We are also finding that clients who have engaged in some scenario mapping of their retirement planning are better equipped when it comes time to negotiate compensation. If the only opportunities they are finding have less total pay, understanding how much they need to make to achieve their goals ensures they know the floor they could go to.

DISCLOSURE: Securities and Investment Advisory Services are offered through Osaic Wealth, Inc., member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth. Osaic Wealth does not offer tax or legal advice. Unemployment, COBRA, and severance rules vary by state and individual circumstance. This material is for general informational purposes only and is not intended to provide specific tax, legal, or employment advice. We suggest that you discuss your specific situation with a qualified financial advisor, tax professional, or legal counsel, and consult your state's Employment Security Department for unemployment-related questions.