What do you do if you get laid off at 60, with retirement almost in sight? It’s one thing to be working off a mortgage and paying off loans to lower your overhead as you head into retirement, but when you add the extra whammy of losing the stability of a paycheck, a re-evaluation of your situation is priority one.
Especially when that choice is out of your hands: The Employee Benefit Research Institute’s 2014 Retirement Confidence Survey found that nearly half of American workers retired earlier than they expected, mostly due to health problems, job issues or family responsibilities.1
Borrowing from your 401(k) might be an acceptable choice in certain situations, but that is usually relevant only if you can pay it back while you are still working. So if you just got laid off or have a good idea that you will be in the near future, it probably isn’t a good idea to use your 401(k) for an additional source of revenue. You would typically have a short time to pay it back if you lost your job, depending on your plans guideline, or the amount will become taxable.
If you do decide to retire, it is best to work out a budget that takes into consideration any losses due to a down market if applicable so you ensure that you don’t take out more from your retirement account that you can afford. You’ll also have to purchase healthcare until you are 65, and these costs tend to rise as you get older. If you would like to determine just how much your benefits will be if you stop working, the Social Security Administration has an online Retirement Estimator to help you plan for your retirement. Just go to www.socialsecurity.gov/estimator.
On our website at mooneylyons.com, you’ll find retirement strategies to help you determine your appropriate course of action. If you have any immediate questions, feel free to fill to give us a call at 1-847-382-2600.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
1. Barsch, Rebekah. Laid Off At 60? How To Plan For An Unplanned Retirement. Northwestern Mutual. 17, Nov. 2014.