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Most workers would feel good when they\u2019re just a year away from achieving a long-awaited goal like retirement. But with today\u2019s volatile job market, some people\u2019s careers are tripping at the finish line.<\/p>\n<\/p>\n
Take the case of Brian. He was fired at the age of 69, just one year before he was set to retire. According to a survey by the Transamerica Center for Retirement Studies [1], nearly six-in-10 retirees (58%) retired sooner than planned. Among this group, 43% cited employment reasons such as job loss (16%), organizational changes (16%), job unhappiness (14%) and retirement buyout (9%).<\/p>\n
Though he has ample savings, Brian is unsure what his termination means for his 401(k) and whether he should start collecting Social Security right away. Should he work with an employment lawyer to try to get a larger severance payout?<\/p>\n
With so many questions, on top of the shock of being let go, his head is swimming.<\/p>\n
Here\u2019s what he can do to sort out his surprise early retirement.<\/p>\n
Luckily, Brian is in a decent place financially. Between his 401(k) and other investment accounts, he has a little over a million dollars saved.<\/p>\n
Even then, he might be coming up a little short. Americans think they\u2019ll need $1.26 million to retire, according to Northwestern Mutual\u2019s 2025 Planning and Progress Study [2]. By contrast, Vanguard says [3] the average retirement account balance for those 65 and older is just $299,442. That\u2019s only 24% of Northwestern Mutual\u2019s target figure.<\/p>\n
If you find yourself facing a layoff, or are worried about being fired before retirement, you could consider working with a financial advisor to plan a budget for your new situation. Ensure that you can draw down your savings at a rate that balances having a comfortable yearly income with the knowledge that your funds will last as long as you need them to.<\/p>\n
With Advisor.com<\/a>, people seeking retirement advice can find a vetted financial advisor in minutes.<\/p>\n Simply answer a few quick questions about yourself and your finances, and Advisor.com will match you with a financial professional who can offer advice for your unique financial situation. From here, you can schedule an initial consultation<\/a> for free with no obligation to hire.<\/p>\n Read more: Here are the 7 top habits of \u2018quietly wealthy\u2019 Americans<\/a> \u2014 how many do you follow?<\/strong><\/p>\n It\u2019s important to note that in at-will employment states, your employer can fire you for any (legal) reason at any time, even after you\u2019ve announced your retirement. If Brian has any doubts about whether his termination was legal, he should speak to an employment lawyer who may be able to help him bring an action against his former company.<\/p>\n Illegal reasons for firing an employee include discrimination based on age and ethnicity, retaliating against employees for exercising their legal rights, whistleblowers reporting unsafe or illegal work practices, or because of an employee\u2019s medical condition.<\/p>\n While there are no state or federal laws making severance pay mandatory, it is usually customary for salaried employees. The payout may depend on your position and how long you’ve been at the company.<\/p>\n Whether you should negotiate for more also depends on your unique circumstances, and you should carefully read your severance agreement before you sign it. Also consider speaking to an expert.<\/p>\n Your contributions to your 401(k) plan are yours, even if you are fired. Since Brian has been with his company for many years, he is likely fully vested in the program, and therefore also owns his full share of his employer\u2019s contributions.<\/p>\n “When you retire, you can leave your 401(k) in the current plan, roll it over into an IRA or take a lump sum distribution,” explains BlackRock [4].<\/p>\n “Each option has benefits and drawbacks\u2026 Consider fees, investment options and liquidity needs. Understanding tax implications is crucial, and consulting a financial advisor can help you minimize your tax burden and comply with IRS rules.\u201d<\/p>\n Brian can apply for Social Security right away and receive more than his full retirement benefit amount since, at 69, he is older than his full retirement age. However, he would be able to maximize his monthly benefit by waiting until age 70 to claim Social Security.<\/p>\n Since Brian is close to retiring, he may elect not to apply for unemployment. However, he would be eligible provided his termination was without cause. He should be aware, however, that any severance he collects counts as income and may impact the payout he receives from the federal program.<\/p>\n While Brian is losing out on his last year of savings before retirement, he can continue to build his portfolio even though he will be primarily spending rather than saving.<\/p>\n If you\u2019re in retirement, you may think that you are in spending mode rather than savings mode. However, with Acorns<\/a>, you can continue building up your investments with every purchase.<\/p>\n The app automatically rounds up the price of each of your purchases to the nearest dollar and deposits the difference into a smart investment portfolio<\/a> so that your spare change works harder for you. This can be a great way to continue saving even after you retire, and can transform your spare change into something longer lasting.<\/p>\n And the best part? If you set up a recurring monthly contribution Acorns can give you an extra $20<\/a> to get you started.<\/p>\n If you\u2019re in the pre-retirement stage, you may want to consider diversifying your portfolio outside of the stock market \u2014 especially if you\u2019ve watched your investment balances yo-yo over the past year.<\/p>\n Alternative assets like real estate and gold remain popular as in-demand alternatives to the more traditional division of stocks and bonds. Both asset classes also tend to be somewhat shock-resistant, which means they can continue to perform even when market benchmarks like the S&P struggle.<\/p>\n Gold is also at a record high right now, hitting about $3,700 per ounce [5] in September. A gold IRA allows you to take advantage of this hot commodity while giving you some market diversification.<\/p>\n Opening a gold IRA with the help of Goldco<\/a> allows you to invest in gold and other precious metals while also providing the significant tax advantages of an IRA.<\/p>\n With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver<\/a>.<\/p>\n Unfortunately, getting fired when you\u2019re close to retirement is fairly common. A study from ProPublica and the Urban Institute [6] found that 28% of stable, longtime employees sustain at least one damaging layoff by their employers between turning 50 and leaving work for retirement.<\/p>\n With a solid retirement fund in place, Brian can rest easy about his future financial security. If you are fired without a solid base of savings to rely on, be sure to speak to a financial advisor to help you understand your options for retirement or to plan how to return to work.<\/p>\n Join 200,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/strong><\/p>\n At Moneywise, we consider it our responsibility to produce accurate and trustworthy content people can rely on to inform their financial decisions. We rely on vetted sources such as government data, financial records and expert interviews and highlight credible third-party reporting when appropriate.<\/p>\n We are committed to transparency and accountability, correcting errors openly and adhering to the best practices of the journalism industry. For more details, see our editorial ethics and guidelines<\/a>.<\/p>\n [1]. Transamerica Center for Retirement Studies<\/a>. \u201cRetiree Life in the Post-Pandemic Economy 24th Annual Transamerica Retirement Survey\u201d<\/p>\n [2]. Northwestern Mutual<\/a>. \u201cAmericans Believe They Will Need $1.26 Million to Retire Comfortably According to Northwestern Mutual 2025 Planning & Progress Study\u201d<\/p>\n [3]. Vanguard<\/a>. \u201cHow America Saves\u201d<\/p>\n [4]. Blackrock<\/a>. \u201cWhat to do with your 401k after retirement?\u201d<\/p>\n [5]. Goldprice<\/a>. \u201cGold Price Performance USD\u201d<\/p>\n