Retired, Ready or Not: Finding Your Footing After a Forced Exit

5 minute read time.

If you find yourself in this situation, giving yourself ‘breathing space’ to create a plan is crucial.

Forced early retirement can come as a shock, disrupting not only your sense of identity but also throwing off-course your long-term retirement savings plans. According to a new survey, the fear of unemployment has now reached its highest level since the pandemic. The prospect of losing one’s job is nerve-wracking for anyone, but especially for those closest to retirement.

If you’re approaching retirement and concerned about losing your job, or if you’ve already faced a forced early retirement, it can be stressful to say the least. The good news, though, is that there are things you can do to bounce back — financially, mentally, and emotionally.

FIRST, GIVE YOURSELF SOME BREATHING SPACE

As Kerry Hannon, Senior Columnist at Yahoo Finance and co-author of the forthcoming book Retirement Bites: A Gen X Guide to Securing Your Financial Future explains, one of the keys to a successful retirement, whether it’s planned or not, is knowing what you’re retiring to. In other words, how do you plan to spend your time? Naturally, this can be more challenging for those who are forced to retire unexpectedly.

As Hannon explains, if you find yourself in this situation, giving yourself “breathing space” to create a plan is crucial. Do this on your own first and then, if you’d like, enlist the help of someone else who can provide honest feedback. “It’s often important to talk to somebody who maybe isn’t your best friend or your partner, but somebody who is a little unbiased and kind of looks at your life holistically from the balcony,” says Hannon.

NEXT, THINK ABOUT WHAT’S MADE YOU HAPPY (LIKE, REALLY HAPPY)

Studies have shown that for some people, depression and retirement go hand-in-hand. That’s because for many, identity and work are closely intertwined. Once work goes by the wayside, it leaves a major void, and a grieving process can follow, says Hannon.

To get through it, she says, the key is thinking about the things that have brought you joy and figuring out new ways to incorporate them into your retirement, or the next chapter of your career. “What would you like more of, and what are you just fine walking away from?” she asks. “We all have different things that turn us on, and we often forget what those things are.”

Figuring out your list could be as simple as journaling or organizing your thoughts on a computer. As Hannon explains, it’s less about the method and more about taking a beat to think things through. “Allow yourself the time to just dream a little,” she says. “I’m not saying you need to run to something, but it’s that emotional piece that’s a little tricky. It’ll come. [But] it may not happen right away, so spend the time doing that soul searching.”

HOW TO PREP IF YOU THINK A JOB LOSS IS COMING

If the writing is on the wall, and you think a job loss might be in your imminent future, Hannon says there are things you can do to prepare. At the top of the list is beefing up your emergency fund. “This is huge, because the numbers show that this is when people dip into their retirement accounts,” she says. One of the easiest ways to boost your reserves is by automating. For example, have part of each paycheck deposited into a high-yield savings account that’s just for emergencies. (Often, as the success of 401(k)s has shown, if you don’t see it and you don’t touch it, you won’t spend it.)

While the traditional advice for emergency funds is to have three-to-six months of living expenses, Hannon stresses that even if you have to start smaller, your goal should be to have enough in your bank account to cover a year’s expenses. To get there, take a hard look at your current budget and see what tweaks you can make to increase your savings. “This is your time to build that emergency account,” says Hannon. “The bigger you can have it, the better buffer it will be to get you through a period of time where you really aren’t certain about where your next job opportunity is.”

[See: Figure out the essential expenses in your budget, so you can check off the basics]

JOB SEARCHING FOR THE SENIOR SET

Faced with an early retirement, but aren’t quite ready to stop working? You’ll likely find that job searching is a whole new ballgame – and, in many cases, that ageism is alive and well in the workplace. Recent research indicates that 74% of older Americans believe their age could be a barrier to employment.

“You’ve got to have skills [that are] relevant,” warns Hannon, stressing that the number one thing older job seekers need to do is make sure their skill set remains sharp and current. “You can’t get by on what you already have in your toolkit. Things are changing too fast.”

One of the other hurdles older job seekers will face is coming to terms with the fact that they probably won’t be able to replicate certain aspects of their old jobs, including (sadly and frustratingly) salaries and titles. “Figure out the minimum salary that you can be comfortable with, and then use that as your base point, because you may have to take a step back,” Hannon says. “Just be willing to be nimble and be flexible…you can redeploy your skills to lots of different fields than what you were currently working in, or are currently working in.”

THE EARLY RETIREMENT PACKAGE: TO TAKE, OR NOT TO TAKE?

For many older workers, finding oneself at the crossroads of a lucrative early retirement package and continuing to work isn’t uncommon. But if you’re presented with an early retirement offer, how do you decide whether to take it?

First, consider it from a financial perspective. Is it six months of pay that you can sock away while you’re looking for your next opportunity? Is it enough to get you to your retirement savings goal? As Hannon points out, if you’re under 65, making sure you’re able to secure health insurance if you’re not working is a critically important part of the equation. “It’s a very big decision to make, and not one to be made overnight,” stresses Hannon.

THE BOTTOM LINE

If you’ve been forced into an early retirement, the financial and emotional side effects are hard to overcome, but not impossible. A big part of bouncing back, Hannon notes, is remembering that your job loss was likely a business decision – in other words, don’t take it too personally. “Go back to look at your old performance reviews…boost yourself up,” she says. “You need to remember that you have talent, you have a future. You can make a difference in the world, too.”

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