Did you love your job? If so, you may have been happy with your life. That is until your supervisors explained that your company was cutting costs. Due to those cost cutting measures, you are being forced into early retirement.

Most likely, you are over 55 years old. If you are like many other individuals in your shoes, panic may be the first feeling that sets it. Yes, being forced into early retirement may seem like “the end of the world,” but it doesn’t have to be.

Company Grapevine

At most companies, cost cutting is already in the company news or being talked about on the company grapevine. Everyone is talking about what is going on “upstairs” or in the board room. Most likely, your company, if it is of any size, has or will be bringing on a consultant. This way, management has someone to point the finger, when layoffs or early retirements take place. “We have visited with our consultants and it is their recommendation that . . . ”

First, when you get the news, take action. See if you can stay on for an additional two or three months – say 90 days. This will give you time to get your affairs in order. Explain that you understand that cutbacks are necessary, but as a valuable employee, you’d like to get your affairs in order and would like to stay on for three months “or so”.

Transition Teams

This terminology “or so” lets your employer know that you are going to go willingly, but would like some consideration and employment time to get your stuff together. Another term that is used is to ask, “Can I be on the transition team?”. Transition teams are needed to get the company from the size they are now, to the size they will become in six months. Transition teams might be one or two employees or they might be 100 or more. Some people will be asked to be on the team, and why not you?

When being forced into early retirement, you will be required to sign a number of important documents. Never agree to retirement without first learning about your company’s rules, restrictions, and attached strings. Will you receive a severance package? Does that severance package eliminate your pension or eliminate you from receiving any other important employee benefits? If so, talk to a financial advisor right away, particularly before you sign anything. Determine what your best course of action is. Is it better to take the severance pay or receive all of your benefits?

Get To A Financial Advisor, Fast!

Speaking of talking to a financial advisor, you should take this step anyway. Early retirement can throw a wrench into your plans. You may need professional assistance to get those plans fixed and back on track. A financial advisor can examine your retirement wants and needs, determining an estimated figure that you need to comfortably retire. Next, a financial advisor can help you come up with a plan of action to get those needed funds.

In the event that you opt for a severance package, do not spend that money right away. Unfortunately, many forced into retirement make this mistake. If you are living day-to-day, use your money to pay for your necessities, such as food and shelter, but nothing else. If you have “extra,” money, deposit it into a savings account or an Individual Retirement Account (IRA). Doing so may increase your money, based on interest rates and tax benefits.

What About Social Security?

It is also important to remember that social security benefits come with rules and restrictions. Just because you are forced to retire early, it doesn’t mean that you qualify to receive social security yet. That is why you are encouraged to take action and right away. Should you qualify for early social security benefits, due to your age, know that the amount you receive over time may be smaller than what you intended to live on.

Most importantly, remember that being forced into early retirement doesn’t necessarily mean that you have to stop working. If you are asked to retire a few years earlier than planned, you may be unable to do so financially. Will your money run out too soon? If so, working may be your only option.

Health Insurance

Before leaving your current job and accepting your company’s early retirement package, examine your health insurance. Regardless of your age, you should never be left without health insurance. Depending on your age and your financial standing, you may qualify for Medicare or Medicaid. However, do not leave your job without knowing. COBRA will leave you protected for 18 months, but you should have another plan. If you start working again, you may be able to get health insurance coverage through your new employer after 90 days. (Note: Some companies will give you health insurance if you work only 20 hours per week – like Starbucks).

Start Planning Even If You Are Only 20 or 30

If you haven’t been forced into retirement, it is an event that you should still plan for. Many companies are finding themselves losing money. For that reason, they are offering early retirement packages to many of their long-term workers, particularly those that are close to the retirement age. With that in mind, just because you are close to the retirement age, it doesn’t mean that you are ready for it. Even if you are only twenty or thirty years old, please know there is a chance you could be forced into early retirement down the road. That is why it is imperative that you start saving for retirement now, as you never know what the future holds.

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Jeremiah John

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