Americans nowadays are retiring later in life than ever, due to longer life spans, better mental and physical health, and—unfortunately—lack of savings to retire earlier. But for a growing number of older Americans, retirement age isn’t a choice. If you lose your job in the ten years or so before you planned to retire, it can be difficult to find a new job that matches your skills, interests and financial requirements. For many older Americans, finding any job at ages 50 or older is a considerable challenge. One reason is that hiring managers may be unfairly biased or ageist, not wanting to hire someone who they think will retire soon or who doesn’t have the “vigor” of a younger person. While age discrimination in hiring is illegal, it is often difficult to prove
Being forced into early retirement is a scary prospect, but there are smart steps you can take to prepare for the possibility. If rumors are swirling at your place of work of the possibility of lay-offs, don’t wait to take stock of your current financial situation. Make sure you have access to your retirement accounts. If you are in a situation where your employer is legally required to offer severance pay, begin to consider what an appropriate package would be and how you will negotiate terms in your favor. Thinking ahead about your expectations means that you will not be blindsided should you be called into that unfortunate meeting where you get the bad news. Unfortunately, not every workplace will offer you a severance package if you are let go. Some state have laws that require employers to offer severance packages to employees when their being let go is no fault of their own, for example if the business is closing an office or downsizing. Otherwise, severance pay is only required if it is promised by the employer, like in a contract or employee handbook. Research your state laws and look over company policies.
If you are forced to leave the job you planned to have until you retired, consider taking on a part-time job or one with lesser pay or status. Even if you have a PhD, a part time job as a cashier or saleswoman will put extra, much-needed cash in your bank account. Many older Americans are taking advantage of the growing “gig economy” and earning money by taking on part-time work, such as freelance writing, dog walking, tutoring, or driving for car services like Uber. Be thoughtful and open to job opportunities that might not align exactly with your experience or skills.
You should also take advantage of unemployment benefits if you’re laid off. If you are forced into early retirement because of an illness, you may be eligible for disability benefits. Wait to claim your Social Security benefit until at least your full retirement age if possible. If you claim it early (which you can do starting at age 62) your benefit could be permanently reduced by as much as 30%. Learn more about claiming strategies at ssa.gov. Also act quickly to get health insurance. You may be eligible for COBRA which allows you to keep your insurance through your employer for a period of time, but you will be required to pay the full premium yourself. You should also look at your options available through www.healthcare.gov (also known as the Health Insurance Marketplace). The Affordable Care Act required that states create these health care exchanges that will allow you the opportunity to shop for a new plan if you lose your job.
Most importantly of all, adjust your spending habits and carefully review your budget and long-term savings so that you can plan accordingly Forced early retirement is an undesirable situation, but it is an increasingly common one—you are not alone!