It isn’t just government employees who face the prospect of an early retirement. According to a recent EBRI Retirement Confidence Survey, 46% of retirees leave the workforce earlier than planned. The reasons vary, but retiring earlier than you anticipate requires some fast adjustments to ensure lifetime financial security. And, analysis by ProPublica and the Urban Institute shows more than half of older U.S. workers are pushed out of longtime jobs before they choose to retire, suffering financial damage that is often irreversible.
Why Are People Forced to Retire Early
While an early retirement is a goal for many people, it isn’t always voluntary. In fact, the EBRI found that around 65% of individuals who leave the workforce earlier than planned are forced into retirement due to circumstances beyond their control.
Thirty five percent are forced into an early retirement because of a disability, health problem, needing to care for an aging parent or another hardship. While another 31 percent say that they retired due to changes at their
company.
What to Do if Faced with an Earlier than Expected Retirement
While this transition may feel daunting, taking the right steps can help you regain financial security and peace of mind. Here’s what to do next:
1. Process the Change
Before making any major decisions, take time to process what has happened. Being forced into retirement can be an emotional shock. You may be feeling anxiety, panic, sadness, anger and other strong emotions. It’s important to acknowledge your feelings, seek support from loved ones.
And, take your time. There is no need to rush into long term problem solving right now.
Be sure to participate in activities that make you feel good — exercise, sleep, and talking with friends will help you feel better.
2. Reframe Retirement as an Opportunity
Being forced into retirement can feel like a setback, but it can also be a chance to explore new passions, improve your quality of life, and spend more time with loved ones.
Use this time to redefine what retirement means for you:
3. Assess Your Near-Term Financial Situation
While you don’t want to make any rash decisions, you do need to make sure your finances are stable in the near term. Start by evaluating your immediate resources and expenses:
- Review Your Severance Package – If applicable, understand the terms.
- File for Unemployment Benefits – Check with your state’s labor department to determine eligibility.
- Tap Into Emergency Savings Wisely – Use emergency funds strategically to cover necessary expenses without depleting them too quickly.
- Explore Health Insurance Options – If you lose employer-sponsored coverage, consider COBRA, Medicare (if eligible), or Affordable Care Act plans.
- Adjust Your Budget – Identify essential expenses and reduce discretionary spending to align with your new financial reality.
4. Assess Your Long-Term Financial Security
Okay. Once your near-term financial situation is stable, it is time to take a look at whether you can truly afford to retire earlier than you had anticipated. This requires a holistic financial evaluation.
To start you’ll want to:
- Plot all future income sources, including Social Security. (The temptation will be to start as soon as possible, but that may not be the best long-term decision.)
- Document your savings and investments and how you will both grow and use that money.
- Evaluate how your spending will evolve over time.
- Predict how long you (and your spouse, if applicable, will live).
- Make assumptions about the future of the economy, taxes, and other known unknowns.
If done thoroughly using a tool like the Boldin Retirement Planner, the above information will enable you to determine if you can afford to retire now or not.
If it seems like you can not quite afford the retirement you want, you’ll want to assess trade-offs:
- What are your options for work? Do you want to switch careers? Work part-time? Or, would you prefer other compromises? Play with different levels of work income to see what really works for you.
- Would you consider downsizing or retiring abroad somewhere less expensive? Housing is usually your most valuable asset as well as biggest cost and there is a lot you can do to improve your budget by switching up your housing plans.
- Are there any big expenses you could forgo? Explore 24 ways to cut costs for retirement.
- Are you optimized to reduce taxes and maximize income from savings?
- Use the Boldin Planner to run “what if” scenarios until you find a plan that enables you to afford the life you want.
5. Execute Your Plan
Once you have a clear picture of your financial situation, put your plan into action:
- If retirement is feasible, adjust your spending and investment strategy accordingly.
- If additional income is needed, explore part-time work, consulting, freelancing, or gig opportunities.
- Ensure legal and estate planning documents (wills, powers of attorney, healthcare directives) are up to date.
Final Thoughts
Being forced into retirement can be challenging, but by taking these proactive steps, you can regain financial stability and confidence. Whether you embrace full retirement or seek new opportunities, this transition can be a chance to create a fulfilling next phase of life.
