What Should I Do If I’m Laid Off Right Before Retirement?
Have your question answered on the Money Wisdom Question Series!
A layoff close to retirement can rock your sense of financial stability, but it doesn’t have to derail your plans. Job losses often lead many people to take an earlier-than-expected retirement. But with the right planning, you can get back on track toward your goals.
In this week’s Money Wisdom Question Series, Heath Grossman, CFP® breaks down five crucial steps to refocus your retirement plan after a layoff.
1. Apply for Benefits
Immediately after you’ve been laid off, apply for unemployment benefits if they’re available. This income stream can help cover basic living expenses, at least temporarily. Also inquire about any severance pay that you’re due from your company. These benefits can provide a cushion while you figure out next steps.
2. Review Your Income Needs
Next, understand where you stand financially, both with your expenses and your savings. Take stock of your current assets, investments, and income sources, including Social Security and pension plans. Determine whether you have enough to cover your monthly expenses. If you discover a savings shortfall, a financial advisor can help you develop an income plan to bridge the gap.
3. Explore Health Insurance Options
If you’re younger than 65 and not eligible for Medicare, it’s important to consider your health insurance options. Healthcare costs are one of the most significant retirement expenses. You may choose to continue your employer-provided coverage through COBRA for up to 18 months. Or you could explore the Affordable Care Act marketplace or join a spouse’s employer-provided plan.
4. Manage Your Retirement Accounts
Many people choose to roll their employer-sponsored retirement plans into an IRA for greater choice, control, and flexibility. But be cautious with distributions if you’re under 59½, as taxes and penalties may apply. Since there are nuances and exceptions, work with a financial planning professional before taking any withdrawals.
5. Re-evaluate Your Retirement Timeline
Ask yourself, should I wait to retire when I originally planned, or can I effectively start my retirement now? You may want to consider part-time work for additional income or if you’re not mentally ready to start the next chapter.
You don’t have to navigate a layoff near retirement alone. Get your free copy of our book, Forced to Retire: The 7 Decisions You Need to Make Now! It walks you through these choices step by step and helps build confidence in your next move.
Information presented here is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
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Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
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