Retirement is supposed to be a celebration—the reward after decades of hard work. But what happens when the decision to retire isn’t yours? At Southeast Retirement Planners, we’ve seen a growing number of individuals facing layoffs just a few years before their planned retirement age—often in their early 60s. This can be financially, emotionally, and logistically challenging.
In this blog, we’re diving deep into what you should do if you’re facing—or concerned about facing—a layoff before you reach retirement age.
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The Layoff Nobody Sees Coming
Whether you’re 60, 61, or 63, a layoff before age 65 can throw your retirement plans into uncertainty. While many people plan to retire at 65 or later, restructuring, mergers, or private equity changes can accelerate that timeline. Large companies sometimes offer severance packages to those nearing retirement, thinking it might be a "win-win," but the reality is often much more complicated.
It’s important to understand that while retirement is typically a time of joy and freedom, it also ranks among the top 10 most stressful life events—especially when it happens unexpectedly.
Emotional Impact: More Than Just Financial
For most of us, work is more than a paycheck. It’s routine, purpose, relationships, and identity. Losing that suddenly can feel like the rug has been pulled out from under you. You’re not just losing a job—you’re adjusting to a completely different lifestyle. You might even have to relearn how to enjoy time at home, spend more hours with your spouse, or navigate days without the familiar structure.
Step One: Don’t Panic—Get the Facts
When facing a layoff close to retirement, the most important thing is to gather the right information. Before making any financial decisions, you need to:
- Assess your 401(k) and pension status
- Review emergency savings
- Understand your health insurance options, especially pre-65
- Check your unemployment eligibility
- Analyze your Social Security timeline and options
Too often, people make big decisions based on water cooler talk, misinformation, or Google searches gone wrong. Instead, get real facts—preferably with the help of a licensed financial professional.
Financial Strategy: Build a Realistic Game Plan
Here’s what we often look at with clients in this situation:
- Evaluate all retirement assets
- Determine monthly expenses vs. income (severance, unemployment, savings, etc.)
- Look into potential part-time or contract work
- Consider Roth conversions – Lower income years can be ideal for this
- Understand the Social Security income thresholds – Claiming too early and continuing to work can reduce your benefit
Retirement planning isn’t just about pulling numbers—it's about sequencing those numbers in the right way. For example, pulling from retirement accounts without a plan can trigger unnecessary taxes or penalties
Health Insurance: The Biggest Surprise
This is often the biggest shock for those under 65.
Yes, COBRA allows you to continue your employer-sponsored health plan, but you’ll be paying the full premium, and it’s not cheap. Alternatives on the health insurance marketplace might look attractive, but often come with less coverage.
Pro tip: If you’re 62 and get laid off, bridging the gap until Medicare at 65 can be one of your biggest financial hurdles. Make sure you’re factoring this into your decision-making.
Sample Case Study: A Real-Life Scenario
A recent client came to us at age 62. Their original retirement goal was 66.5, but a sudden layoff changed everything. Here’s how we helped:
- Severance: Covered one year of salary and health insurance
- Healthcare costs after severance: Much higher than expected
- Social Security: We analyzed claiming options at 62, 65, and full retirement age
- Assets: We built a net worth statement and reviewed retirement accounts
- Employment options: Explored part-time or lower-stress jobs to bridge the income gap
This wasn’t a one-meeting fix. It took some time to gather all the facts.
Plan Before You’re Forced To
One of the best pieces of advice we can give: Start preparing before a layoff ever happens. Even if you feel secure in your job, changes in the economy or corporate structure can surprise anyone.
Start with:
- Building a healthy emergency fund
- Staying invested and diversified
- Evaluating healthcare options early
- Keeping your skills up to date in case you choose—or need—to work again
- Establishing a relationship with a financial advisor who knows how to navigate transitions like this
There Is a Game Plan—You Don’t Have to Go It Alone
If you find yourself laid off before retirement, know this: you’re not alone, and there is a path forward. The key is not to make rushed decisions based on fear or misinformation. With proper planning and support, you can navigate the uncertainty and potentially even come out stronger.
We offer a free, no-obligation financial checkup to anyone not currently working with us. Whether you’ve been referred or just found us online, we’d be happy to sit down with you and talk through your options.
You can reach us at (828) 855-2067 or visit our website to learn more. Let’s have a conversation about your future—planned or unplanned—and how to make the most of it.
Remember: Even if you didn’t plan to retire yet, life has a way of presenting new opportunities. With the right mindset and preparation, what starts as an unexpected challenge could become the beginning of a well-deserved new chapter.
Disclosures: Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. Southeast Retirement Planners is not affiliated with LPL Financial or registered as a broker-dealer or investment advisor.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.