Severance payments are considered "earned income" and are considered "compensation" for purposes of making contributions to qualified retirement plans.
If your employer offers a qualified plan (401k, 403b, or something similar) you can maximize your participation ($19,500 if under age 50 or $26,000 if age 50 or older). For example, if you have been contributing $500 per month, you could ask HR to raise your contribution to up to $15,000 for the last month.
You can contribute up to $6000 to a traditional IRA, or Roth IRA, or up to $7000 if you are age 50 or older. Roth IRA contributions may be disallowed if you also participate in a workplace retirement plan. You can contribute to a traditional IRA, but it might not be tax deductible if you participate in a workplace retirement plan, depending on your income.
That's the only 2 ways to get new money into a retirement account.
However, one additional option that might be beneficial is to do a Roth conversion. If you have a pre-tax 401(k), or a traditional IRA, or both, you could do a rollover to a Roth IRA. This will create a large tax bill, which you can afford to pay thanks to the large severance package. The long-term advantage is that when you retire, Roth withdrawals are not taxable, so using the severance to fund the tax on a Roth conversion is an indirect way to use the severance to increase your net retirement income.
