You Got a Severance Package. Here's Your First 90 Days.

Henry Supinski, ChFC® · 4 min read · July 2026

A layoff is disorienting, and the paperwork lands fast. Before you sign anything or make a big decision, it helps to slow down and work through the pieces in order.

Weeks 1-2: Don't Sign Under Pressure

Most severance agreements come with a review period, often 21 days or longer, plus a revocation window after signing. Use it. Read the release language carefully, understand what you're giving up, and if the offer includes equity acceleration or a longer COBRA subsidy, don't assume the first number on the page is the final number.

Weeks 2-4: Health Coverage and Cash Flow

Figure out your health insurance gap before it becomes urgent. COBRA keeps your existing plan but is expensive; a marketplace plan may be cheaper depending on your household income during the gap. At the same time, build a real cash flow picture: the severance amount, any unused PTO payout, unemployment eligibility, and how long that combination needs to last.

Weeks 4-8: Equity and Timing

Check your vesting schedule and any post-termination exercise window for stock options. Some companies give you only 90 days to exercise vested options after departure, which can force a decision (and a tax bill) faster than you'd like. Know these dates before they sneak up on you.

Weeks 8-12: The Bigger Decision

• Resist the urge to take the first offer that shows up out of anxiety about the gap.
• Decide whether a lump sum severance changes your tax picture for the year, and whether it's worth an estimated tax payment.
• Use the pause, if you can afford it, to actually think about what's next rather than defaulting to the nearest similar role.

The Fine Print That Decides the Money

Most of the value in a severance package hides in a few specific terms. The release of claims is the big one. If you are 40 or older, federal age discrimination rules generally give you at least 21 days to consider a release, or 45 days in a group layoff, plus a short window to revoke after signing. Those clocks exist to protect you. The company cannot rush you past them, and you should use the full time if you need it.

Then read the equity language twice. Some agreements accelerate a portion of unvested shares. Others simply confirm that everything unvested is forfeited on your termination date. A vest date that falls two weeks after your last day can be worth more than an extra month of salary continuation. That makes the termination date itself a negotiating point most people never think to raise.

A Hypothetical Package on Paper

Here is a hypothetical to make it concrete. A director earning $190,000 is laid off. The package offers six months of salary continuation, about $95,000, plus three months of subsidized COBRA and a payout of unused PTO. She also has RSUs worth roughly $60,000 vesting five weeks after her termination date, all forfeited under the standard terms.

Her first instinct is to ask for another month of pay. The better ask may be moving her termination date past the vest, or requesting cash in place of the forfeited shares. One conversation is worth roughly $15,000. The other is worth $60,000. The figures are invented, but the ranking shows up in real packages all the time.

How We Approach It

My own role was eliminated in 2023, so I have read this paperwork as the person whose name was on it, not just as an advisor. When a client brings us a package, we work the same sequence every time. Deadlines first, because the release clock and any option exercise window are the parts you cannot get back. Then health coverage. Then the cash flow runway. Then the tax picture, because severance is ordinary income, and a lump sum stacking on top of a partial year of salary can move your bracket in ways that surprise people. If you are leaving SAP specifically, we keep a detailed walkthrough on our SAP severance page and a broader guide at leaving SAP.

Questions We Hear

Can I negotiate a severance package?

Often, yes, though not always successfully. Larger companies with standardized packages have less room, but termination dates, equity treatment, COBRA duration, and outplacement support are all terms people have moved. The worst realistic outcome of a professional ask is usually a no. An employment attorney is worth the fee when the numbers are large or the release language is broad.

Should I take a lump sum or salary continuation?

When you get the choice, it is a trade. A lump sum is certain and yours immediately, but it concentrates income into one tax year. Salary continuation spreads the income out and sometimes keeps benefits running, but it may come with conditions. The right answer depends on your tax year, your benefits gap, and how quickly you expect to land the next role.

Does severance affect unemployment benefits?

It depends on your state and how the severance is structured. Some states delay unemployment while salary continuation is being paid. Others treat a lump sum differently. Check your state's rules before assuming either answer, because the interaction can change which structure you prefer.

What happens to my 401(k) and deferred compensation?

Your 401(k) stays yours. You can leave it, roll it over, or consolidate it later, and no deadline forces your hand. Nonqualified deferred compensation is different. Separation from service often triggers a payout schedule you elected years earlier and cannot change now. I managed deferred comp elections during my own SAP years, and this is the document I tell people to find first. If you have a balance, locate that election before you make any other money decisions. We wrote a full guide to the deferred compensation payout election.