5 Ways to Handle a Forced Early Retirement

You had a plan: You would work until 67, contributing the maximum amount of each paycheck into your company's 401K plan. You would then enjoy a retirement of traveling the world and spending time with your grandchildren.

But then your company changed your plans. They let you go you at age 55 or 60. Finding a new job at this age isn't easy. According to an AARP study released in 2015, 45% of job hunters aged 55 or older were members of the long-term unemployed, those who were out of work for 27 weeks or longer. And when these older job seekers did find new jobs, they tended to earn less money. The same AARP survey found that almost 48% of people 55 or older were earning less on their new jobs than they did at their old ones.

Those are intimidating numbers. But they don't mean that a forced early exit from the workforce will dash your retirement dreams. Here are five steps that you can take after you've been laid off or fired to make your earlier-than-planned retirement a successful one.

1. Assess Your Financial Reality

It's easy to panic when you've lost a job. But your financial situation might not be as dire as you think. To find out, it's time to perform a quick financial assessment.

First, list your monthly expenses. These might be lower if you are no longer paying a mortgage each month. Then list the income you have coming into your household. Maybe your spouse's income means that you can still save enough money each month for a happy retirement. Maybe you'll need an extra income boost from somewhere to still hit those goals.

Depending on how close you are to your official retirement age, you might decide to start receiving your monthly Social Security payments. You'll get less each month if you haven't reached full retirement age, but if you can't hold off on the extra monthly income, receiving your benefits a few years early might be a sound move.

If you were laid off or fired, you probably qualify, too, for unemployment insurance. Make sure to take advantage of this. That extra monthly income could help you stay on track for your retirement goals.

2. Get Realistic About Your Retirement Goals

You might have to scale back your retirement goals should you be forced to exit the workplace earlier than planned. Maybe you planned to take a long trip every year. If you're forced out of work five years early, you might have to scale that back to just three big trips spread out over your entire retirement.

This doesn't mean that your retirement is ruined. But you might have to refocus. Maybe instead of joining that high-priced country club, you'll be taking your golf clubs to public courses throughout your city.

3. Make Sure You Have a Plan for Insurance

You'll need health insurance even after you lose your job. You might qualify for Medicare or Medicaid, though you might not qualify for these government programs depending on your age and income levels.

If you need insurance not offered through the government, you can search for a low-cost plan through the insurance exchange created under the Affordable Care Act.

Letting your health insurance lapse can be a costly mistake.

4. Find Part-Time Work to Fill in the Income Gaps

If you need some extra income each month, consider taking a part-time job. This work, even if it doesn't come with the benefits of a traditional full-time job, could provide you with the extra bit of cash that will keep your retirement dreams alive.

Depending on your field, you might find a part-time job as a consultant. But even if you can't, you can still find enjoyment, and some extra financial security, by taking on a position in a new field.

5. Meet With a Professional

Retirement planning is complicated when everything goes according to plan. When those plans are suddenly changed? It's even more of a challenge to make sure that you have enough dollars saved for your after-work years.

That's why it's important to meet with a financial adviser who can help you determine what financial steps you need to take now. Depending on your income and community, you might even qualify for free financial advice.

A financial planner can help you create a new budget and a new financial plan that fits with your new money reality.

Have you faced early retirement? What steps have you taken?

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