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Navigating Job Loss When Nearing Retirement

 

 

In this episode of after the paycheck, John Conley and Adam discuss a topic that is very topical to a lot of Americans right now:

“Navigating job loss when nearing retirement”

John and Adam discuss a few hypothetical situations and what to do if you are in one of these hypothetical situations. If:

  • You HAVE been let go from your job and were planning to retire in the next 5 years
  • Your company offers you a pension buy out today, but you were hoping to work for another 3-4 more years
  • You want to know what are some things to do TODAY to help shield yourself from a sudden loss of income in the future

If you HAVE been let go from your job and were planning to retire in the next 5 years:

  • The first question to ask yourself is “ Can I maintain my lifestyle without working?”
    • Figure out your monthly essential needs budget, (mortgage, car payments, insurances, etc.)
    • Determine what your other income sources/options are {Social Security earlier than planned, do you have a pension, can/should you withdraw from your 401k now}
    • Start to think about other unexpected expenses (new roof, heating system, sudden medical issues, car issues, etc.)
    • Are you old enough to start on Medicare, or do you have to find your own medical insurance?
    • Consider inflation and higher tax rates for the future
  • After analyzing this info, if you CAN retire, congrats! You did it! If NOT, you want to weigh some of your options:
    • Looking for new employment
    • Find ways to reduce expenses
    • Work with a professional to help increase your probability of success in retirement

If your company offers you a pension buy out today, but you were hoping to work for another 3-4 more years:

  • Again you want to ask yourself “Can I maintain my lifestyle without working?”
    • Figure out your monthly essential needs budget, (mortgage, car payments, insurances, etc.)
    • Determine what your other income sources/options are {Social Security earlier than planned, do you have a pension, can/should you withdraw from your 401k now}
    • Start to think about other unexpected expenses (new roof, heating system, sudden medical issues, car issues, etc.)
    • Are you old enough to start on Medicare, or do you have to find your own medical insurance?
    • Consider inflation and higher tax rates for the future
  • Try to get more information as to WHY the company is offering a buy-out
    • Is the company at risk of doing under?
    • What is your guaranteed pensioned income now?
    • Is your (union, company rep, etc.) about to try to renegotiate pension benefits in a down economy?
  • Determine if you’d be better off taking the lump-sum and investing elsewhere

What are some things to do TODAY to help shield yourself from a sudden loss of income in the future?

  • Start to think about your monthly expenses (essential and fun), keep track so you have a better idea of what you’ll NEED in retirement (again, don’t forget to think about inflation, taxes, and rising medical costs over the years)
  • Find out the rules/penalties for withdrawing from certain retirement accounts at (whatever your age is):
    • Not all retirement accounts are the same, and different rules apply for taking withdrawals at a pre-retirement age
  • Make sure you are contributing to retirement accounts if your employer provides a match (free money is free money!)
  • Work with a financial advisor who can help you create a written retirement plan and determine how much your money will have to work for you to help you reach the amount you’ll need to live a long, successful retirement, whenever that moment comes.
Want to download the Monthly Budget/Income Gap Finder discussed on the episode? Click here to request your copy!

 

Tags: Retirement Planning, Asset Protection Planning, Income Planning, 401(k), after the paycheck

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