Becoming unemployed while nearing retirement age means you’re faced with a difficult decision: should I look for a new job or just retire now? The answer depends on your unique financial situation, but there are a few things you should keep in mind as you try to decide your future.
Rethinking your career plan
The most obvious question facing anyone who was recently laid off and is nearing retirement age is: Can I afford to retire? But perhaps the better question is: Am I ready to retire, and if not, what are my chances at finding another job? Layoffs may be unwelcome, but they can offer a unique chance to rethink your overall career goals. You may not have been planning on retiring for another five years, but consider how that earning potential would affect your future. Could you accomplish the same financial objectives working part-time? You also need to realistically weigh your chances of finding another job. This will depend a lot on your unique professional experience, but if you feel the chances are slim, it may be time to take a closer look at your financials.
Weighing financial assets
The next step is to assess your current financial situation and how that stacks up to your vision for the future. Budgeting is critical at a time like this, and you need to consider how short-term decisions could have long-term consequences. For example, withdrawing from your 401(k) early to pay some bills could cost you thousands in penalties and taxes, meaning that money would be better left alone. Also consider any severance package you may have received from your former employer and how you can put that money to best use. While it may be an unwelcome thought at the moment, working just part-time hours in retirement can generate enough income to maintain your savings and get you through until your assets have matured. Also remember to factor in any unemployment benefits you could receive during a job search and the number of years until you can collect Social Security as well. A true financial analysis will take all of your assets into account and provide a roadmap for your future.
Keeping a level head
As you assess your financial standing and career goals, keep an open mind about all the possibilities available to you. Being laid off at such a crucial juncture in life is difficult, but try to see it as an opportunity rather than a setback. Unemployment offers the chance to change industries, take on new challenges, cut back hours or retire altogether. If a layoff derailed your retirement plans, don’t stick to those plans. Explore all the possibilities available to you and come up with a new strategy that makes sense for both your short and long-term plans.
Below you will find additional information and resources on retirement options: