Houston Layoffs 2025: Financial Survival Guide From The Trenches

Since January 2025, we've witnessed a troubling wave of layoffs sweeping across Houston's economic landscape. This isn't isolated to a single industry or a temporary correction—it's systemic and affecting thousands of Houstonians across multiple sectors.

As someone who has guided clients through financial transitions for over two decades, I've developed a practical approach to weathering these storms. After counseling countless state employees, educators, and healthcare professionals through similar challenges, I want to share strategies that can transform a layoff from crisis to opportunity.

Understanding Houston's Current Layoff Climate

The numbers tell a concerning story. LyondellBasell is closing its Houston refinery, laying off over 400 employees by mid-April. Chevron, now headquartered here, is cutting 15-20% of its global workforce—nearly 9,000 positions—through 2026. APA Corporation has eliminated almost 300 positions, and Hewlett Packard Enterprise is reducing its workforce by 5%, with many cuts hitting their Spring, Texas operations.

Even essential services aren't immune. Waste Management is eliminating 1,000 jobs as automation takes hold. In healthcare, Texas Children's Hospital is cutting 1,000 staff positions. Nonprofits like RAICES and Catholic Charities are laying off staff due to funding shortfalls.

What makes this particularly troubling is the breadth of affected industries. This isn't simply a tech bubble bursting or an energy sector contraction—it's widespread market restructuring.

Federal and state employees face unique vulnerabilities as government cost-cutting initiatives target entire departments. With Texas implementing similar efficiency committees, we'll likely see state-level cuts accelerate through 2025.

The First 72 Hours After Receiving Layoff News

First—take a deep breath. Getting laid off feels deeply personal, but it's almost never about you. It's about company priorities, cost-cutting measures, automation trends, or strategic shifts.

Start by gathering critical information:

Get everything in writing. Your layoff notice, severance details, and benefit information should be properly documented.

Ask specific questions: When exactly does your healthcare coverage terminate? What are your COBRA options? Will the company provide outplacement services or retraining opportunities?

File for unemployment immediately through the Texas Workforce Commission. Benefits aren't retroactive to when you lost your job—they start when you apply.

And remember: acknowledge the emotional impact. This represents a significant loss—not just of income, but of professional identity, daily structure, and workplace community. It's entirely normal and healthy to grieve this transition.

Protecting Your Financial Foundation

When regular paychecks stop, your priority becomes protecting cash flow:

Create what I call a "crisis budget." This isn't your normal spending plan. Ruthlessly prioritize essentials—housing, utilities, groceries, transportation, and insurance. Temporarily pause discretionary spending like subscriptions, dining out, and non-essential purchases.

Your emergency fund exists precisely for this scenario. That's your first line of defense—not your retirement accounts. I've seen too many clients make the devastating mistake of cashing out 401(k)s during unemployment periods.

If you tap your 401(k) before age 59½, you'll face a triple financial hit: early withdrawal penalties, income tax obligations, and permanently sacrificed growth potential. Even worse, these withdrawals often happen when markets are down, violating the fundamental principle of buying low and selling high.

For state employees and educators, there's another layer of complexity. You must ensure you're not sacrificing pension benefits by leaving before you're fully vested. When evaluating buyout offers or early retirement packages, conduct a thorough side-by-side comparison to understand the long-term pension implications, especially if you're not yet fully vested.

Healthcare Considerations During Transition

Healthcare continuity represents one of the most immediate concerns following a layoff. COBRA allows you to maintain your employer's health coverage, but often at considerable expense since you'll pay both the employee and employer portions plus an administrative fee.

If your spouse has family coverage through their employer, this typically provides the most cost-effective interim solution. Otherwise, investigate ACA marketplace plans at Healthcare.gov. A sudden income reduction often qualifies you for significant premium subsidies that weren't previously available to you.

For those within five years of Medicare eligibility, carefully evaluate whether short-term health insurance might bridge the gap until you reach 65. These plans offer lower premiums but provide less comprehensive coverage and may exclude pre-existing conditions.

Cash Flow Management During Employment Gaps

Managing finances during unemployment requires a different approach than during stable employment periods. Your transitional budget should reflect your current reality, not your aspirational spending.

This means accepting certain short-term sacrifices that won't become permanent features of your financial life. While I generally advise against pausing retirement contributions, temporarily reducing or suspending them is preferable to withdrawing existing retirement funds.

Communicate proactively with creditors. Many mortgage companies, credit card issuers, and auto lenders offer hardship programs that can provide temporary payment reductions or forbearance options. The key is initiating these conversations before missing payments.

If you're already working with a financial advisor, this is the moment to shift from your standard financial plan into what I call "transition mode"—adjusting strategies to weather temporary income disruption while preserving long-term financial goals.

Tax Implications of Severance Packages

Severance payments almost always carry significant tax consequences. For my clients, we analyze their tax thresholds through annual return reviews, allowing us to anticipate potential issues.

When possible, negotiate to receive severance payments in January of the following tax year rather than December of the current year. This simple timing adjustment can sometimes produce substantial tax savings, especially if your regular income has placed you near a tax bracket threshold.

Lump-sum severance packages can temporarily push you into higher tax brackets. Working with an advisor who includes tax planning in their practice can help identify strategies to mitigate this impact, potentially through increased retirement plan contributions or other tax-advantaged approaches.

Investment Strategy Adjustments

For those facing potential layoffs while approaching retirement (within the 5-10 year window), investment strategy becomes particularly critical. I advocate what I call an "all-weather rules-based approach" that emphasizes growth during market expansions while prioritizing capital preservation during contractions.

Even if you've historically achieved significant success with equity-heavy portfolios, the transition to retirement requires a fundamental mindset shift. Your priority becomes generating sustainable lifetime income rather than maximizing annual returns—a psychological adjustment that many successful professionals find challenging.

This typically means gradually reducing portfolio volatility through diversification and strategic reallocation. Sequencing risk—the danger of experiencing significant market downturns early in retirement—becomes a primary consideration rather than a theoretical concept.

Layoff as Opportunity: Retirement or Reinvention?

For those nearing retirement, a layoff sometimes represents an unexpected bridge to that next life phase. This isn't about guesswork or wishful thinking—it requires rigorous analysis of your investments, pension benefits, Social Security options, and anticipated expenses.

If the numbers support early retirement, this disruption might actually accelerate your timeline. If analysis reveals gaps, consider phased retirement approaches that combine reduced work hours with partial portfolio distributions.

For mid-career professionals, this transition might catalyze meaningful career evolution. I've seen clients successfully pivot to new industries, launch consulting practices, or finally pursue certifications they'd postponed for years.

Resources like Coursera, LinkedIn Learning, and Texas Workforce Commission programs offer accessible pathways to develop new skills during this transition period. The key principle: don't waste a disruption. Use this moment to design your next chapter rather than simply reacting to what's changed.

Unique Opportunities for State Employees

State employees transitioning to private sector roles may actually discover unexpected retirement planning advantages. Those previously working for employers who didn't participate in Social Security might now begin accumulating credits while simultaneously gaining access to 401(k) plans with employer matching contributions.

This makes salary and benefit negotiations particularly important. Resist accepting the first available position out of financial anxiety. Temporary "band-aid jobs" that don't meet your compensation requirements can actually delay your long-term financial recovery by limiting your ability to rebuild emergency savings and resume retirement contributions.

Building Resilience Beyond the Current Crisis

While navigating immediate challenges remains the priority, this experience should inform your future financial approach. Consider strengthening these financial resilience factors once stability returns:

Expand your emergency savings beyond traditional recommendations. The standard three-to-six month reserve may prove insufficient during prolonged job searches in specialized fields.

Develop secondary income streams that could provide partial support during primary income interruptions. This might include consulting, freelancing, or strategic investments.

Regularly practice living on reduced income. Periodically stress-test your household budget by living on 70-80% of your normal income while directing the difference toward savings.

Invest in continuous professional development and network cultivation even during stable employment periods. The most effective job search begins long before you need a new position.

Moving Forward With Confidence

Having guided clients through multiple economic cycles over two decades in Houston's financial services industry, I've observed that financial resilience isn't primarily about resource abundance—it's about strategic adaptability.

Those who successfully navigate layoffs approach them as transitions rather than endings. They acknowledge emotional challenges while implementing practical financial strategies. They protect long-term assets while managing short-term cash flow constraints. Most importantly, they recognize disruption as a catalyst for reassessment and intentional redirection.

The current wave of Houston layoffs represents genuine economic challenge, but with thoughtful planning and appropriate guidance, it need not derail your long-term financial security. By implementing these strategies while maintaining perspective, you can transform this unexpected transition into a foundation for future resilience.

Christopher Hensley is President and CEO of Houston First Financial Group, a Retirement Income Certified Professional®, Certified Estate Trust Specialist ™ and host of the Money Matters podcast. He specializes in helping state employees, educators, and healthcare professionals successfully navigate retirement planning complexities through disciplined, rules-based investing.

These are the opinions of Christopher Hensley and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Diversification and asset allocation strategies do not assure profit or protect against loss. Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk.