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An informational & educational website that explores a wide range of topics aimed at helping people to and through their retirement.

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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