April 15, 2014

How Much Severence Can You Expect If You Lose Your Job?

If I lost my job my employer would pay me a severance package.   At least that is what they normally do.  There  is really no promise or guarantee that I'd get severance but whenever I've heard of other people losing their jobs they've gotten severance.    In the past the company has had some large lay offs and they shared tables to estimate the severance amount you would get.   The severance here works out to roughly 1 week of pay per year of service.

I went out to find data on how much severance companies usually pay.  I didn't find a lot of information but I did find a couple sources.
This AARP article Read This Before Accepting a Severance Offer claims that "Slightly less than 50 percent of employers provide some amount of severance pay to workers whose employment is terminated."
An article in the CNN Money Ask Annie column How Much Severance Pay Can You Expect? says: "about half of employers offering two weeks' salary for each year you've worked there. Slightly more than one in three pay one week's salary per year of service; and fewer than 20% offer less than a year's pay per year of service."

If I add both those pieces of data then I estimate the following rough approximation for how much employers pay out in severance. :



Of course this is based on two unattributed data sources and I don't know how accurate either is so it should be taken with a large grain of salt.

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