Key Points
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Being forced to retire earlier could mean falling short of savings goals.
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Before you panic, take stock of your options, including strategically claiming Social Security.
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See if there are options for generating income through gig or consulting work, even if you can’t line up full-time employment.
At some point during your career, you may land on a retirement date that seems to work for you. But your employer or industry may have other plans.
Being forced to retire sooner than expected could deal your finances and mental health a blow. Here’s what to do if retirement comes sooner than you’d like it to.
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Take stock of your options before making big decisions
If you’re forced into early retirement, your first instinct may be to panic. But it’s important to assess your various income streams and see how to use them strategically.
You may have less savings than you wanted due to ending your career a few years too soon. If you’re looking to preserve your nest egg, or if it’s a bad time to take withdrawals due to the state of the market, then claiming Social Security sooner rather than later could be an option.
However, you should know that if you don’t wait until full retirement age to claim Social Security, your monthly benefits will be permanently reduced. That age is 67 if you were born in 1960 or later.
If your plan was to work until 67 but you’re forced to retire at 64, filing for Social Security at that time could reduce your checks by 20%. So, what you may want to do in that situation is reduce spending for a few years and see if you can lean on your savings to get through that period.
You may also be entitled to some sort of severance pay from your employer, as well as unemployment benefits through your state. It may be possible to use those income streams to bridge at least part of the gap between your retirement date and when you’re eligible for your Social Security benefits in full.
Look for new ways to generate income
Even if you’re unable to work full-time, you may have different options for earning a part-time paycheck. You could try to get a part-time job in town, join the gig economy, or see if it’s possible to consult in your former field.
If you’re leaving your job on good terms despite being let go, it may be worth trying to negotiate a consulting arrangement. Your company can benefit from your knowledge and expertise, and you can continue to earn some money to ease the financial impact.
Your retirement isn’t a lost cause
Being forced into retirement sooner than expected can feel overwhelming, but it doesn’t mean your senior years are doomed. Take the time to review your financial options while exploring ways to continue earning a paycheck, even if it’s a much smaller one than your full-time salary.
And also, be kind to yourself. It’s not an easy thing to have your plans upended, so focus on self-care as you navigate your choices.
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