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.