Have you ever stopped to consider the actual cost of being unemployed?

The longer you are out of work, the more costly it is. Here are some factors you may — or may not — have considered as the “cost of unemployment.”

Lost wages. Loss of income is the most obvious cost of unemployment. Unemployment benefits – if you’re eligible for them — only cover a portion of your lost income. According to research by Newsweek, basic unemployment benefits average $300-$400 a week, typically covering 45% of a worker’s income. Severance pay, if offered, can help, but a long period of unemployment can outlast that as well.

Cost of insurance. According to the 2019 Census, 55% of Americans have employer-paid health insurance. Research from the Kaiser Family Foundation found the average annual single premium per enrolled employee for employer-based health insurance was $6,972 per year in 2019, with the employee contributing $1,489 of that, and the employer paying $5,483.

While the Consolidated Omnibus Budget Reconciliation Act (COBRA) health insurance program allows eligible employees and their dependents to continue their health insurance coverage for 18 to 36 months after a job loss, the entire cost of the premiums is the responsibility of the individual.

If COBRA coverage is not available, individuals can obtain insurance through the government’s Healthcare Marketplace, which can be expensive. A short-term health insurance policy may be more affordable but may have a higher deductible and limited coverage. Going without healthcare insurance is risky financially. Medical bills are reported to be the number one cause of U.S. bankruptcies, and being uninsured can lead to significant out-of-pocket expenses.

Lost retirement contributions. If you were contributing to your company’s retirement plan — especially if your contributions were matched by your employer — consider the financial impact of missing out on adding to your retirement savings. Every $500 missed could be worth up to $1,300 (assuming 5% growth over a 20-year period). Missing out on 6 months’ worth of retirement contributions could equal almost $8,000 in lost retirement income.

Increased stress and anxiety. According to CNBC, 63% of households report living paycheck to paycheck, meaning the loss of even one month’s salary could cause severe financial insecurity. Did you know, 8 in 10 people say they currently can’t cover a $500 emergency? Research also shows that unemployment is linked to anxiety and depression, among other negative outcomes.

Negative impact on future salary. When you’re unemployed, you may take a lower-paying job just to get back into the job market. However, since future raises are based on your new (lower) starting salary, you may find yourself missing out on tens of thousands of dollars of future income.

For example, if your original salary was $50,000, and you received annual raises of 3%, after 5 years, your salary will be $56,275.

If you took a job that paid $45,000 and you received annual raises of 3%, after 5 years, your salary will be $50,647 — barely what you were making when you left your previous position. You would have also missed out on $26,544 in pay during those 5 years ($265,453 from the starting salary at $50,000 plus 3% raises minus $238,909 (5 years of salary starting at $45,000 with a 3% annual increase).

The best thing you can do if you find yourself unemployed is to get back to work quickly.

So, how can you prepare for unemployment?

First — and most important — keep your résumé up-to-date and ready to go. Not only is it easier to pay for résumé services when you’re employed, but you won’t lose valuable time getting started with your job search. It can take anywhere from a few days to a few weeks to create an interview-winning résumé and portfolio of career documents. The sooner you are able to start your job search, the closer you’ll be to going back to work. Also, the longer you are unemployed, the harder it is to find a new job.

Second, have an emergency fund. One of the biggest struggles with unemployment is losing your income. Unemployment benefits — if you’re eligible to receive them — can take weeks to get approved. In the meantime, having an emergency fund — even a small fund of 2-4 weeks of expenses — is better than nothing. Most experts recommend having 3-6 months of savings.

Third, the best offense is a good defense. If you think you’re in danger of losing your job, get busy. Make a list of your current expenses (review your checkbook register, credit card statements, or online banking profile) and see what you can cut out. Determine which of your current monthly expenses must be maintained (mortgage and car payments, utilities, groceries) and which ones you can do without for now. Eliminate any unnecessary expenses.

Finally, don’t wait until you lose your job to start looking. Take the advice of author Harvey Mackay and “Dig Your Well Before You’re Thirsty” and cultivate your network while you’re still working. Build your connections on LinkedIn. Keep in touch with former co-workers and supervisors.

After all, the cost of unemployment is high. Higher than you may have thought.