I was talking with a journalist the other day for a story on how to prepare for those last ten years before retirement, from age 55 onward.
We had covered all the main points when she asked me, “Well, but what happens if you get laid off or have to quit unexpectedly before you reach age 65?”
“That seems to be happening to a lot of people I know down here in South Florida,” she continued.
Boy, didn’t she just put her finger right on it.
It is something that is happening across the country. Older (and higher-paid) middle and senior management seem to be the first ones laid off when there are cutbacks. And of course, the higher your salary, the longer it takes you to find a new job.
Finding that new job can be especially tricky in South Florida, where corporate employers are few and far between. (How many Fortune 500 companies are even left here anyway?).
Health issues can also contribute to quitting your job early, and in total, more than half of workers under 70 who left the workplace did so earlier than planned due to health or job issues. That’s bound to have a big financial impact on their retirement plans.
We’ve all seen the lives of clients, neighbors, and friends turned upside down by an unexpected job loss. But here’s the good news. Losing a job before you get to that retirement finish line might not be such a bad thing. It’s all in how you handle it.
Here’s some tips:
Plan for the unexpected. Even if you feel your job is ultra-secure, have a contingency plan in place. That means keeping your resume up-to-date, upgrading skills and credentials, networking to stay in touch with others in your industry, and cultivating interests outside of work.
Cut the bleeding right away. Whether you’ve lost your job or are experiencing a serious decline in revenue (as many professionals and self-employed people did during the 2008 recession), the key is to cut back your spending – and fast. This might mean dumping the vacation home, expensive car leases, or eating out every night. If you can’t afford it, don’t do it. I can’t tell you how many people we see whose income has dropped precipitously, yet, they keep spending like there is no tomorrow. Contrast that with people who adapt to changing circumstances, whether job loss, divorce or any other shock, by making rational adjustments in their spending and lifestyle. Those who adapt to changing times will come through it all with flying colors. The ostriches with their heads in the sand? Probably not.
Time to switch it up. After a job loss, it might be time to change it up and put someone else in the driver’s seat. Frequently, there’s a non-working or partially-employed spouse who can step in and add some needed income.
Don’t wait to save until the final stretch. Many people plan to put their savings into over-drive once they reach their 50s, and get the kids out of college and off the family payroll. But it’s dangerous to postpone your savings until then, since health issues or other dilemmas can end your working career prematurely. It’s imperative to start saving as soon as you land your first job. The earlier you start, the less you have to put aside, and the easier it is to stay on track.
Be willing to relocate. One of our clients, a health-care executive, lost his job in South Florida but was able to locate a new one in Denver, Colorado. The new location offered a welcome change of pace and what the clients hoped was a healthier, less-congested lifestyle. They sold their home here and made the move West. The new job is helping them close the gap until their retirement date, and open the door to new friendships and activities.
Go your own way. It’s not unusual for even high-performing executives to get the ax nowadays. Frequently, it has nothing to do with them or how well they did the work, but more to do with trimming the head count across the organization. We’ve seen several clients leave the corporate life and set up consulting firms of their own. That lets them work as much, or as little, as they please, and be their own boss for a change. Another advantage: as your own employer, you can make generous contributions to your own retirement plan.
Enjoy the moment. That may sound like odd advice when you’re going through financial crisis, but you may just find that what you thought was important really isn’t. Forget the material things, and focus on friends, family, and the quality of your life.