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Sudden Job Loss!! Preparing for Unexpected Retirement

Never before have we lived in such unsettling times. The entire fabric of society is being shredded with the outbreak of a global pandemic, associated economic meltdown, and social unrest.

Entire industries are decimated with massive layoffs. No one predicted such turmoil and how you deal with it might be the only thing you have control over.

Whether you’re ready to retire or not, this is an imminent threat for the majority of baby boomers.

By preparing for unexpected retirement, you’re in a better position to manage what might happen in the future.

  • Accept you may need to prepare for retiring sooner than expected.
  • Get your finances in order. This includes managing debt, having an emergency fund, and understanding what you’ll need.
  • Ensure your healthcare coverage doesn’t lapse.
  • Supplement your income through part-time work or a side business.
  • Discuss options with your spouse / partner.

If you’re in the midst of coping with job loss or health issues, try to stay calm. Objectively review the situation and how best to deal with your situation. Don’t make any rash decisions and create a plan for your future.

Preparing for Unexpected Retirement

Preparing for an unexpected retirement is something that every person, especially those close to retiring, should think about. The best strategy is to plan for the worst-case scenario and hope for the best.

As much as you’d love to believe you’ll retire on your own schedule, the reality is it may not be completely on your own terms.

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Older Workers Not Being Called Back

Unfortunately, ageism still plays a factor when deciding who to keep in the workforce. And, it has gotten more prevalent with COVID-19 and the massive amounts of layoffs, furloughs, pay cuts, etc.

Some companies will try to use the pandemic as an excuse to get rid of older workers, whom they consider, as more highly paid with more benefits.  

Sadly, this isn’t a new phenomenon. In a study by Allianz Life, half of Americans retired due to reasons beyond their control. 34% said it happened because of a sudden job loss. 25% stated a health problem arose preventing them from performing their job anymore.

Get Your Finances in Order

Dave at Accidental Fire discussed in his article financial independence, how much do you want it, Americans are saving more than ever. Peaking in April at 33%; whereas the previous record was 17.3% back in 1975.

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Hopefully, you’ve been saving for the future. You might have thought you’ll have plenty of time to pad that nest egg. And, WHAM, out of the blue you’re retired! Now what?

In preparing for unexpected retirement, start by eliminating as much debt as possible. When you’re no longer working, the last thing you want is a huge credit card bill with a staggering interest rate hanging over your head.

Figure out what the essential expenses in life are like housing, food, utilities, etc. Building a budget could be helpful with these decisions.

If there are others that aren’t as critical, can they be put on the back burner for a while? These might be the nice-to-dos. Going for dinner, renovating the deck or things like that.

On that note, try not to cut into any savings you do have. You’re going to need them more as your retired years have just increased. If you have an emergency fund, use that instead. That’s what you set it up for, right?

You need to adjust your lifestyle to accommodate this drop in wages. 

Healthcare Coverage

COVID-19 has shown just how important health coverage is. Having supplemental insurance has never been more critical. Especially if you’re under 65 and don’t qualify for Medicare yet.

Millions have lost their jobs and, with that, the employer paid medical benefits. Without decent coverage, the costs of co-pays, prescriptions and other needs could increase rapidly.

That being said, you really do need health insurance. The costs incurred for necessary treatments and procedures can far outweigh the cost of the premiums.

When you leave your job, you have 60 days to apply for COBRA. This allows you to stay on the company plan for 18 months and, sometimes, up to 3 years. The downside is the premiums could be expensive and, now, you’ll be paying them.

Depending on your household earnings, it might be worthwhile checking into the Affordable Care Act and Medicaid.

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Supplementing Your Retired Income

Replacing your full-time career with another job may be extremely difficult, especially during a pandemic. By exploring different sources of income, you can add extra money into your cashflow.

If you see the writing on the wall, apply for a line of credit before you leave your job. This cushion will help you ride out the tide.

Part-time work is a viable option for some. Also, it could come with those treasured healthcare benefits. The best way for older workers to seek work is through referrals like family and friends.  Still others might decide to start their own home-based business.

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Another option, downsize. You’ve probably owned your home for quite some time. It might be bigger than you need now (the kids are gone, etc.). Or, the upkeep might be getting too much for you.

By downsizing into something more manageable and functional at this stage of your life, it could put some of that equity in your pocket. Rather than being tied up in the house, you put that cash into your retirement income.

Discuss Options with Your Spouse / Partner

In a perfect world, you and your spouse/partner might prefer retiring at the same time. That may no longer be viable and those conversations need to happen. Especially if one of you has a pre-existing condition or facing job loss.

Discuss your options and whether unexpected retirement is manageable. Besides helping to alleviate fear, uncertainty, and doubt, this strengthens your relationship.

If you’re not on the same page, this can lead to resentment and marital strife. As dire as the situation might appear, together, you’ll find a way to get through it.

Scenarios When You Might Choose to Retire Unexpectedly

With COVID and everything else going on in the world, circumstances around retiring suddenly seem to have grown faster than ever.

Never before have we seen people leave their places of employment when they love what they do. Here are just a few examples.

You Don't Feel Safe Going into Work

Lately, there are a lot of articles saying people don’t feel safe returning to their workplace during COVID-19. In particular, teachers being forced to return to the classroom without appropriate safety protocols.

As much as they might love their job, it just isn’t worth risking their life. This can apply to numerous other professions leading many to opt for an early or unexpected retirement.

Health Concerns

No one plans to get sick. Taking health concerns into consideration is another way of preparing for unexpected retirement.

Maybe you’ve had a fall or caught coronavirus yourself. Now, you’re suffering the “long haul” symptoms and just can’t seem to get back to normal enough to go to work. Physically, you can't do it.

Or, it could be that a parent, child or partner has a health problem. You need to be their caregiver. Seriously, would you want your parents in a long-term facility right now?

Both these situations would short circuit your employment leading to retiring earlier than you’d anticipated.

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Working From Home, Yay or Nay

With the pandemic outbreak, remote work became almost universally accepted. For some folks, this was a god send. No more commuting and the option to work in sweat pants.

I know when I worked from home, I got way more accomplished. Without the daily disruptions and interruptions from co-workers, employees and my bad boss, I could concentrate on getting through everything I had on my plate.

Alternatively, you’re a very social person and this remote working is driving you crazy!! You want to be in the office talking to your peers and feeling the atmosphere and buzz of the workplace.

Depending on your situation, this might be the final straw to suddenly retire.

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High Risk Careers

Maybe your career is in one of those high-risk professions. These include police officers, fire fighters and medical personnel. As well, others deemed as essential workers put themselves at risk every day – grocery store employees, truck drivers, farmers, etc.

Having to be in public where coronavirus is rampant adds another level of risk. The other is social unrest. With two very volatile situations happening at the same time, who needs the added stress?

They could wake up one day and decide they’ve had enough of it. They’re tired of the tension and, in some cases, under appreciation of their service.

Hospitality Industries, Airlines and Cruise Ships

The airline industry has been decimated. According to predictions for 2020 from the ICAO, airlines will lose anywhere from $375B to $395B. Vast numbers of employees are furloughed and, literally, on stand by. Recovery may take years.

Similarly, cruise ships have been beached. What a horrifying site to see two cruise ships filled with passengers quarantined! Who in their right mind would subject themselves to these “floating petri dishes”, until they can prove they’re safe again?

Carnival, alone, lost $4.4B and is selling off 13 of its ships. By reducing their fleet, the number of workers needed is, also, diminished.

The hospitality industry – hotels, restaurants, bars, etc. – has been hit hard. First, all the closures. Then came partial openings.

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Now with cooler fall temperatures and the flu season, medical authorities are concerned about a second wave. In spite of all the precautions, the hospitality industry could, again, be forced to close

Although sooner than they anticipated, many older workers have determined early retirement is a viable option. Again, who needs the stress and risk of this uncertain environment. I’m sure they didn’t think their career would end this way.

Closing Thoughts 

No one knows how long the pandemic will last or when/how the economy is going to recover. Planning for retirement might not seem important right now. However, when you suddenly retire, you’ll be grateful you did.

Everyone wants a safe, secure and comfortable retirement. Having a good strategy and plan prepares you for whatever life might throw at you next!

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