Severance Runway Calculator
Example: Severance received (after tax): 30000 $ · Monthly living expenses: 5000 $ · Emergency fund available: 20000 $ · Monthly unemployment insurance benefit: 1800 $ · Monthly COBRA premium: 700 $
| Total runway (months) | 12.82 |
| Comfortable search window (70% of runway) | 8.97 |
| Total resources available | $50,000 |
| Net monthly burn rate | $3,900 |
Worked example
A $30,000 after-tax severance plus $20,000 emergency fund = $50,000 total. Monthly expenses of $5,000 plus $700 COBRA minus $1,800 unemployment = $3,900 net monthly burn. Runway: 50,000 / 3,900 = 12.8 months. Comfortable search window: 9 months. That is enough time to be selective — not desperate — which typically leads to higher offers.
Frequently asked questions
Is severance pay taxable?
Yes — severance is ordinary income, subject to federal income tax, state income tax, and payroll taxes (FICA). Employers typically withhold at the supplemental wage rate of 22% for federal, but your true marginal rate at filing varies. Use the Windfall Tax Calculator to estimate your specific bill.
How does COBRA work after a layoff?
COBRA lets you continue your employer health plan for up to 18 months after termination. You pay the full premium — both the employee and employer share — plus a 2% administrative fee. Average family COBRA costs roughly $1,700–2,200 per month; compare with ACA marketplace plans in your area, which may be subsidized based on your reduced income.
Should I negotiate severance before signing?
In most cases, yes. Severance packages are negotiable, particularly for employees with long tenure or performance documentation. One to two weeks per year of service is a common baseline, but companies often go higher for senior roles or when legal risk is present. You typically have 21–45 days to consider and 7 days to revoke a signed agreement.
Does unemployment insurance reduce my severance?
Rules vary by state. Some states disqualify you from unemployment benefits while you are receiving severance; others allow concurrent collection. Check your state's unemployment website immediately after separation, as filing early preserves your eligibility date.