Retire, or rehire? The choice after a layoff at 55 to 65

You're 58 or 62, the layoff is final, and the severance runs out in a few months. Two plans keep trading places. One is to find the next job, maybe at lower pay. The other is to stop, start drawing on savings and, at some point, Social Security. Most people in this spot are weighing both at once, often with a spouse who has a view. If it feels like you're being asked to make a 20-year decision in a few weeks, you're reading the situation right. People tell us the hardest part is the doubt about whether employers still want them, more than the math.

I'm John Schrup. Our family has coached job seekers at FirstSourceTeam since 2006, and this is one of the most common crossroads we sit at with clients. This guide puts the facts behind both plans side by side: how much Social Security pays at each starting age, how many people your age are still working, how often a search after 55 ends in a job, what people your age have saved, and what the years before Medicare cost. It doesn't say which way to go. Health, a spouse's plans, debts and your own accounts decide that, and a fee-only planner or a tax adviser can run the figures for one household.

Social Security benefits at 62, 67 and 70

Full retirement age is 67 for anyone born in 1960 or later, according to the Social Security Administration (SSA). You can start as early as 62, and each month before 67 trims the check. SSA's own example uses a $1,000 benefit at full retirement age: started at 62, it pays $700, a 30% cut. A spouse's benefit, which tops out at half of the worker's full amount, is cut 35% at 62, so a $500 spousal benefit becomes $325.

The reductions step down by month. SSA's table for the 1960 birth cohort shows 75.0% of the full benefit at 63, 80.0% at 64, 86.7% at 65 and 93.3% at 66.

Waiting past 67 adds delayed retirement credits. For anyone born in 1943 or later, SSA adds 8% for each year of delay, or two thirds of 1% a month, and the increases stop at 70. Three years of credits on top of a full benefit comes to 124%.

Note: Values for 68 to 70 apply SSA's 8% yearly delayed retirement credit to the full benefit. SSA notes that some credits earned in the year benefits start are applied the following January.

Exhibit 1. Source: Social Security Administration, 'If you were born in 1960 or later, your full retirement age is 67' (ages 62 to 67, wage earner column); 'Delayed Retirement Credits' (8.0% per year for birth years 1943 or later, stopping at 70)

On an example benefit of $2,000 a month at 67, that's $1,400 at 62 and $2,480 at 70. The earlier start pays more months at a lower rate. Which total comes out ahead depends on how long the benefit is paid, which nobody knows in advance.

One thing we see often: people treat the claiming date as part of the layoff, as if losing the job means starting benefits now. The two dates are separate under SSA's rules, and it helps to look at them one at a time.

One date doesn't move with your claiming choice. SSA says that if you delay benefits past 65, you still apply for Medicare within three months of your 65th birthday, because Part B and Part D can cost more if you sign up late.

Ages at which people start Social Security

SSA's Annual Statistical Supplement counts who started retired-worker benefits each year. In 2024 it recorded 1.874 million awards to men and 1.839 million to women, and the average age at award was 65.2 for both.

Age 62 was the most common single starting point among people newly entitled. It accounted for 22.0% of men's awards and 23.3% of women's. The full-retirement-age column looks bigger, at 27.0% for men and 25.3% for women, but nearly half of it is disability conversions: people already on disability benefits whose payments switch to retirement benefits automatically at that age. Awards at 70 to 74 made up 8.4% of men's and 9.1% of women's.

MenWomen

Note: FRA is full retirement age. Disability conversions are disability beneficiaries whose benefits convert to retirement benefits at FRA. By year of award action. Age is age in the month of entitlement, so the 62 column covers ages 62 years 0 months to 62 years 11 months.

Exhibit 2. Source: Social Security Administration, Annual Statistical Supplement 2025, Table 6.B5, rows for 2024 (men: 1,874,000 awards; women: 1,839,000 awards)

Put plainly, 22% to 23% of new retired-worker awards in 2024 started at age 62, with a cut of up to 30% (SSA counts anyone starting between 62 and 62 and 11 months in that column, and the cut shrinks to about 25% by the end of that year), and under 10% started at 70 or later.

When clients see these shares, some feel relieved that 62 is common and others uneasy that so few wait. Neither reaction settles anything for your household; the table shows what other people did.

Employment rates in the late 50s and 60s

If you're 61 and wondering whether employers still see you as a candidate, these numbers can sting at first. The Bureau of Labor Statistics (BLS), the Labor Department's statistics office, tracks this in its monthly Current Population Survey, which shows how fast work drops off with age. In 2025, 81.2% of people aged 50 to 54 were working or looking for work. That fell to 75.0% at 55 to 59, then to 58.7% at 60 to 64, a 16.3-point drop across one five-year band. At 65 to 69 it was 33.3%, and at 70 to 74, 18.8%.

Note: Share of the civilian noninstitutional population working or looking for work. 2025 is an 11-month average that excludes October (no data were collected during the federal shutdown), so BLS says it is not strictly comparable with other years.

Exhibit 3. Source: US Bureau of Labor Statistics, Current Population Survey, Table 3, 2025 annual averages, Total rows

The trend runs the other way over time. BLS Employment Projections put participation for the whole 55 to 64 group at 62.9% in 2005, 63.9% in 2015 and 66.6% in 2025, and project 69.5% for 2035. For 65 to 74 the rate went from 22.9% in 2005 to 26.7% in 2025.

The unemployment rate for 55 to 64 was 2.9% in 2025. That figure counts only people still looking. Someone who stops looking and calls it retirement drops out of the labor force and out of the rate.

We tell clients the national drop at 60 to 64 mixes choice, health and hiring together, so it says little about demand in your own field.

Reemployment rates after a layoff at 55 to 64

Months of searching wear anyone down, and the silence after a stack of applications is the part people describe to us most. The BLS Displaced Worker Survey follows people who lost a job they had held for three years or more. Its January 2026 survey covered layoffs from January 2023 through December 2025, including 750,000 workers aged 55 to 64.

By January 2026, 57.3% of that 55 to 64 group had a job again, 21.8% were unemployed and 20.8% had left the labor force. Among displaced workers aged 25 to 54, 72.9% were employed and 9.0% were out of the labor force. At 65 and over, 48.9% had left it.

EmployedUnemployedNot in labor force

Note: Workers with 3 or more years of tenure who lost or left a job between January 2023 and December 2025 because of a plant closing or move, insufficient work, or an abolished position or shift.

Exhibit 4. Source: US Bureau of Labor Statistics, Displaced Worker Survey, Table 1, January 2026, Total rows

The survey doesn't separate people who chose to retire from people who stopped looking after a long search. Both land in the same column, so the 20.8% is an upper bound on planned retirements in that group, and the true split is unknown.

In our coaching, searches that stall after 55 tend to stall on the same few things: a resume that reads like the old job description, a network nobody has called in years, and applications sent only through job boards.

Retirement savings by age

Savings figures can sting either way. Yours may look small next to a median, or a large balance may still feel fragile without a paycheck behind it. The Federal Reserve's Survey of Consumer Finances, run every three years and released for 2025 in October 2026, counts IRAs and employer accounts such as 401(k), 403(b) and thrift plans as retirement accounts. Among families headed by someone aged 55 to 64, 63.1% held one, and the median balance among those holders was $239,000. For 65 to 74, 49.0% held one, with a median of $257,000. For 45 to 54, 63.0% held one, with a median of $133,000.

Age of family head	Share holding a retirement account	Median balance among holders
Under 35	48.8%	$21,000
35 to 44	59.6%	$61,000
45 to 54	63.0%	$133,000
55 to 64	63.1%	$239,000
65 to 74	49.0%	$257,000
75 or older	44.6%	$257,000

Note: Retirement accounts are IRAs and employer accounts such as 401(k), 403(b) and thrift plans. Defined benefit pensions are not included. Shares rounded to one decimal from the source file.

Exhibit 5. Source: Board of Governors of the Federal Reserve System, Survey of Consumer Finances 2025, historical report tables (nominal), Table 6, 'Retirement accounts' column, age of reference person rows

Read those medians with the ownership rate beside them. The $239,000 figure describes the middle family among holders only; 36.9% of families in the 55 to 64 group had no retirement account at all. The mean for holders aged 55 to 64 with an IRA or defined contribution plan was $670,200, well above the median, because a minority of large balances pulls the average up.

Net worth, which adds home equity, businesses and other assets and subtracts debt, had a median of $411,900 for the 55 to 64 group in 2025 and $431,300 for 65 to 74. The survey counts families, with age set by the head of the household, so a couple's savings appear as one number.

We push back on comparing yourself with a median. For the bridge years, your own monthly spending and the dates your income starts tell you more.

Costs before Medicare and full Social Security

For many people we work with, the COBRA notice is the moment the layoff becomes real. The bridge is the stretch between the last paycheck and two federal dates, Medicare at 65 and full Social Security at 67. The rules below are the ones that decide what those years cost.

COBRA lets you keep an employer's group plan for 18 months after a job ends, at up to 102% of the plan's cost, according to the Department of Labor. KFF, a health policy research group, put the average 2025 employer premium at $9,325 for single coverage and $26,993 for family coverage, so 102% of the single average comes to $9,511.50 for a year. Some employers offer coverage after retirement: KFF found 27% of firms with 200 or more workers that offer health benefits also offered retiree health benefits in 2025, for at least some current workers or retirees, and 82% of those offer it to early retirees under 65.

Withdrawals from retirement accounts before 59½ generally carry an extra 10% federal tax. The IRS exempts distributions from a 401(k) or other qualified plan if you left that employer in or after the year you turned 55. The same exception doesn't apply to IRAs, so money rolled from the plan into an IRA loses it.

The Social Security earnings test applies to anyone who claims before full retirement age and keeps working. In 2026, SSA withholds $1 of benefits for every $2 earned above $24,480. In the calendar year you reach full retirement age, the limit is $65,160 and SSA withholds $1 for every $3 above it, counting only earnings before the month you reach that age.

Social Security earnings test worksheet, 2026

Year

2026

Annual exempt amount, years before the year you reach full retirement age

$24,480

Withholding rate above that amount

$1 for every $2

2Annual exempt amount, year you reach full retirement age (months before that month only)

$65,160

Withholding rate above that amount

$1 for every $3

Example: age in 2026

63

Example: expected 2026 earnings

$60,000

Example: earnings above $24,480

$35,520

1Example: benefits withheld in 2026

$17,760

1. 1Withheld benefits are not lost. At full retirement age, Social Security raises the monthly benefit to account for the months withheld (SSA, Exempt Amounts Under the Earnings Test).
2. 2Earnings in or after the month you reach full retirement age don't count toward the test.

The withheld money isn't forfeited. SSA says that once you reach full retirement age, your monthly benefit is raised permanently to account for the months it withheld. Earnings in or after the month you reach full retirement age don't count toward the test at all.

Working with FirstSourceTeam

When someone brings this choice to FirstSourceTeam, we start by writing down the dates: when severance and health coverage end, when Medicare begins, and which Social Security ages apply. Then one-to-one coaching works on both paths at once. If another job is on the table, we rebuild the resume and LinkedIn profile, make recruiter introductions where they fit, and prepare you for interviews where age may come up. On the money side, we help you think through timing, benefits and the questions to take to a planner or tax adviser. We don't recommend a claiming age, a product or an allocation. Our free one-hour webinar, every Wednesday at 11 AM Central with John Schrup and Misty Schnuelle, is an easy first step.

Sources

1. Social Security Administration, Starting Your Retirement Benefits Early, accessed Oct 12, 2026.
2. Social Security Administration, If you were born in 1960 or later, your full retirement age is 67, accessed Oct 12, 2026.
3. Social Security Administration, Delayed Retirement Credits, accessed Oct 12, 2026.
4. Social Security Administration, Annual Statistical Supplement, 2025, Table 6.B5: Number and average age of retired-worker awardees, and percentage distribution by age, accessed Oct 12, 2026.
5. US Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, Table 3: Employment status of the civilian noninstitutional population by age, sex, and race, 2025 annual averages, accessed Oct 12, 2026.
6. US Bureau of Labor Statistics, Employment Projections, Table 3.3: Civilian labor force participation rates by age, sex, race, and ethnicity, 2005, 2015, 2025, and projected 2035, accessed Oct 12, 2026.
7. US Bureau of Labor Statistics, Displaced Workers Summary, Table 1: Long-tenured displaced workers by age, sex, race, Hispanic or Latino ethnicity, and employment status in January 2026, accessed Oct 12, 2026.
8. Board of Governors of the Federal Reserve System, Changes in U.S. Family Finances from 2022 to 2025: Evidence from the Survey of Consumer Finances, accessed Oct 12, 2026.
9. Board of Governors of the Federal Reserve System, Survey of Consumer Finances, historical report tables (nominal dollars), Table 6, 2025 survey, accessed Oct 12, 2026.
10. US Department of Labor, Employee Benefits Security Administration, A Worker's Guide to Health Benefits Under COBRA, accessed Oct 12, 2026.
11. KFF, 2025 Employer Health Benefits Survey, accessed Oct 12, 2026.
12. Internal Revenue Service, Retirement topics: Exceptions to tax on early distributions, accessed Oct 12, 2026.
13. Social Security Administration, Exempt Amounts Under the Earnings Test, accessed Oct 12, 2026.