How to Navigate an Unplanned Retirement

Sometimes life can throw curve balls at us, but that doesn’t mean we have to be caught unprepared. In this article, we’re diving into how to best prepare and navigate an unplanned retirement. 

What if you are laid off or forced into retirement before 65, or even before 60? If that happens to you, what do you do in response now that the next phase of your life is starting sooner than you planned?

Crunch the Numbers in an Unplanned Retirement

As a first step, gauge where you stand financially. It could be that the full-time job you just left will be your last. It could be that you have been thinking seriously about retirement.

Depending on your outlook, you may see your glass as half-empty or half-full – but no matter your outlook, you need to assess your financial position.

  • With no income from work, your household will be more reliant on your spouse’s income or savings (assuming you are married at the time).
  • How big is your emergency fund?
  • Is your cash position strong enough so that you can lean on it for a while until you decide how much you want or need to keep working?
  • Do you want (or need) another full-time job? Do you see yourself transitioning into part-time work? Or are you looking forward to retirement?

Regardless of your employment prospects, you will have to calculate the amount of income you receive (or can potentially receive) from other sources – the pension or termination payout you were (hopefully) given, your investments, and other sources of passive income. 

Related: The Pros and Cons of Early Retirement Plan Rollovers

Apply for Social Security during an Unplanned Retirement

If that income doesn’t appear to be enough, should you apply for Social Security as soon as you can? Many financial professionals will tell you no, and here is why:

On the other hand, some people really need the money, some might be in poor health, so they would rather have the income sooner rather than later.

Your projected lifetime Social Security benefit remains the same regardless of when you first file for benefits, so even healthy retirees sometimes sign up as early as they can.

In fact, in a June survey of more than 600 retirees taken by the Nationwide Retirement Institute, 76% of Americans who had been retired less than 10 years and 68% of Americans who had been retired 10 years or longer said that looking back, they felt they applied for Social Security at the right time.

Nevertheless, a time like this is a great time to examine Social Security claiming strategies with help from a financial professional – especially if you are married or have been married. The wrong move could leave a great deal of money on the table. 

If you’re thinking of making changes to your retirement plans or need help navigating your own personal situation, please be sure to contact our office before making any changes.

We can help you look at all angles of your circumstances and create a strategy that’s aligned with your financial goals.

How to Navigate a Sudden, Unplanned Retirement - Are you prepared?

Employer Benefits may still be an option during an Unplanned Retirement

Can you take advantage of any benefits as you leave work? Talk to the HR officer. If you have not been informed of your eligibility for severance pay or an early retirement package, ask about it.

Depending on the circumstances of your exit, you may also qualify for Social Security disability benefits or unemployment benefits.

It will not be cheap to secure health insurance if you need it. If you are lucky, you worked for a big company, giving you COBRA eligibility.

Maybe you are even luckier – perhaps your employer offered you the option of retiree health benefits when you were hired.

Adjust your Retirement Income Strategy and Reevaluate Your Taxes

See what you can do to reduce spending & taxes. Leaving work early might mean that your retirement is longer than anticipated. This calls for a reassessment of your retirement income strategy and your probable retirement expenses, including your day-to-day spending habits.

  • What fixed expenses are non-negotiable? What can you trim?
  • If you are married, are you and your spouse on the same page regarding how much you spend and what you spend money on?
  • Maybe you could sell the house and move someplace cheaper?
  • Maybe just one car is enough?
  • You could eat out less. Spending less on mere wants is appropriate in your situation. 

Every tax dollar you can save is a dollar back in your wallet. So pay attention to investment location and the impact of taxes on your portfolio, as you may be deriving income from investment accounts. 

I’ve put together a great resource that goes over a few tax strategies as well as what it would look like from a high level view.

In this resource, we’ll discuss how different investments have different tax characteristics. The tax characteristics of certain financial options may make a big difference in determining whether such investments fit your specific circumstances and align with your financial goals.

We’ll go over how diversifying your tax buckets may help optimize your tax results both during the accumulation phase of your life and again after retirement.

You can download your Tax Strategies Resource here by entering in your information and your download will be sent right over to your email.

A sudden retirement doesn’t have to be earth-shattering

Stay positive. You may not have left work on your own terms, but you have an opportunity in your hands – the chance to change, and perhaps even reconceive, the way you live and work from this moment forward.

There are so many personal factors when it comes to preparing for your retirement, especially during an unplanned retirement. My goal is to help navigate and provide all the education I can to help you make the right decision for your personal circumstances.

I know there’s a ton of information to take in, and I would love to help you sort it all out. What questions do you have for us here at WAG? 

We’re happy to work with you either in person, over the phone, or virtually, based on your preference. Give our office a call and we can schedule some time together.