Dashboard

RECOVERY

Financial Runway Math for a Laid-Off SWE

How to calculate your real runway — severance, unemployment, savings, spouse income — and what to cut (and what not to cut) when the months start stacking up.

Updated Apr 19, 2026

Financial Runway Math for a Laid-Off SWE

Runway is the single most stabilizing number you can know. Not “I think I have a few months” — the actual number. Once you have it, every decision in the search gets cleaner: how selective to be, when to take a contract, when to negotiate hard, when to accept.

The three-part formula

Runway (in months) = (cash on hand + severance + unemployment) / monthly burn

Walk through each piece honestly.

Cash on hand

Checking, savings, HYSA, taxable brokerage. Exclude retirement accounts (401(k), IRA) — touching those costs 30–40% in tax and penalty, and you’ll regret it in ten years. Exclude anything you’d need a margin loan against.

Severance

Actual post-tax severance, not the headline number. A 12-week severance at $200k/yr gross is roughly $46k gross, ~$30k net in a high-tax state. Also note whether it’s lump sum (hits today) or salary continuation (hits weekly) — they affect when unemployment kicks in.

Unemployment

Varies wildly. US maximum weekly benefits range from ~$250 (Mississippi) to ~$1,000+ (Massachusetts, New Jersey, Washington). Typical duration 26 weeks. File on day one of week one, as covered in week one’s checklist — benefits rarely backdate.

Monthly burn

Be honest. Most engineers underestimate burn by 15–25% because “I don’t spend that much” is almost always wrong when you average 3 months of actual transactions. Open Mint, Copilot Money, or a bank export; categorize 90 days of expenses; that’s your number.

What to cut first

Straightforward cuts that buy you real runway:

  • Subscriptions — audit every recurring charge. Most people have 3–6 unused ones. $50–$200/month.
  • Dining out — from 4x/week to 1x/week saves a mid-sized company’s worth of monthly runway.
  • Coffee, takeout, impulse spend — usually $300–$800/month in aggregate. This isn’t about shaming lattes; it’s that small recurring spend is the easiest to cut and hardest to notice.
  • Travel, upgraded everything — obvious. Pause.
  • Luxury services — cleaning, meal delivery, dog walking. Most of these can be temporarily handled or reduced.

What NOT to cut

Some cuts look smart but cost more than they save. Protect:

  • Health insurance. A single ER visit uninsured can wipe out a year of saved premiums. COBRA or marketplace — pick one, but don’t go uninsured.
  • Therapy, if you’re seeing someone. The search is long and the mental cost compounds. $150 a week is cheap insurance against a six-month depressive slide. Read the mental health guide for why.
  • One weekly social thing. One dinner out with a friend, one gym class, one hobby night. This isn’t discretionary — it’s runway protection in another form. Engineers who fully hermit at month one burn out by month three.
  • The internet bill, the laptop, the tools. These are your search infrastructure. Don’t downgrade them.

Use the runway number to make decisions

Once you know your runway, the search has clearer rules:

  • Runway > 9 months: you can be picky. Target your ideal roles. Negotiate hard.
  • Runway 4–9 months: be reasonable. Keep targeting well but accept early-stage contracts or contract-to-hire if the right one appears.
  • Runway 2–4 months: shift to momentum mode. Broaden targeting. Don’t walk away from decent offers over small negotiation points.
  • Runway < 2 months: emergency. Any reasonable offer that covers cost-of-living beats zero. A bridge role that pays the bills for six months while you keep searching is better than an empty quarter.

Run this calculation once, not once a week. Knowing the number is the point; re-checking it daily just raises cortisol.

Frequently asked questions

Does severance count against unemployment benefits?
In most US states, yes — severance delays or reduces benefits for the weeks it covers. But not everywhere. California, New York, and Texas have different rules. File the claim regardless; the state decides when benefits kick in. The cost of filing is zero; the cost of not filing is real money left on the table.
Should I tap my 401(k) or emergency fund first?
Emergency fund, always. 401(k) withdrawals before 59½ carry a 10% penalty plus ordinary income tax — you're handing roughly 30–40% of the balance to the IRS. A 401(k) loan is slightly better (no tax hit if repaid) but if you leave your next job with the loan outstanding, it becomes a taxable distribution. Use it as third-line, not second-line.
Is it worth paying for COBRA or just going marketplace?
Run the numbers both ways. COBRA preserves your current network and deductible progress but is often $1,500–$2,500/month for a family. Marketplace plans (ACA) can be dramatically cheaper if income has dropped — your laid-off months count toward subsidized eligibility. For many newly-unemployed SWEs, marketplace is half the cost of COBRA.