Though many seniors rush to retire in their early 60s, an estimated 25% of Americans say they're aiming to work until age 70 or later. But just because you're planning to work until a certain age doesn't mean you'll get that option -- especially if you wind up getting laid off later in life.
According to a report by the U.S. Government Accountability Office, unemployed workers 55 and over are considerably less likely than their younger counterparts to find new jobs. In fact, data shows that it takes more than 40 weeks for older workers to become re-employed.
There are several explanations for this trend, none of which are particularly surprising. Some companies are hesitant to hire older workers for fear that they'll retire shortly thereafter. Others would rather onboard younger talent with more up-to-date skills. Unfortunately, that leaves laid-off older workers in an obviously tricky situation.
If you lose your job later in life, it's natural to panic or worry about how it'll affect your retirement. Here's how to handle the situation while keeping your sanity intact.
1. File for unemployment insurance
No matter your age, as soon as you lose your job, your first move should be to file for unemployment insurance. Unemployment will pay you a portion of your earnings provided you didn't leave your job willingly and weren't terminated for cause. Though your weekly benefits won't seem like much if you were a higher earner, it pays to get your hands on whatever money you're entitled to. Keep in mind, however, that there may be a lag between when you first file for unemployment insurance and actually start receiving benefits.
2. Assess your savings
Once you file for unemployment insurance, your next move should be to examine your savings and see how much flexibility they'll buy you. The one benefit, so to speak, of being laid off in your 60s is that you'll be eligible to take penalty-free withdrawals from your IRA or 401(k), so if you need to use that money to pay the bills in the near term, you can dip in without worry.
3. Consider filing for Social Security (but only if you have to)
If you're 62 or older when you lose your job, here's another small bit of good news: You can file for Social Security and start collecting your monthly benefits. There's just one catch -- if you start taking benefits before reaching your full retirement age, which, for today's older workers, is 66, 67, or somewhere in between, you'll face a reduction in payments that will remain in effect for the rest of your life.
Now if you don't have much in the way of emergency or retirement savings, and you need those Social Security payments to cover your bills, you're better off taking a hit on your benefits and avoiding a potentially dangerous cycle of credit card debt. But if you have enough savings to sustain yourself without claiming those benefits, you're better off waiting until your full retirement age.
Also, keep in mind that you are allowed to collect Social Security and unemployment simultaneously. That said, depending on where you live, your unemployment benefits might be reduced if you have money coming in from outside sources, including Social Security, so it pays to do some research before making a move.
4. Get health coverage
Losing your job often means losing your health insurance. If this happens to you, and you're already 65, you can enroll in Medicare and get health benefits that way. If you're not yet 65, you'll need to either pay for COBRA and retain your old health plan, or buy a new plan on the open market.
No matter which option you choose, don't make the mistake of going without health insurance later in life. The last thing you want is a catastrophic medical bill when you're already in a precarious financial situation.
5. Figure out whether you want another job
Maybe you planned on working until your late 60s or 70s because you were comfortable in your role and content with your salary. But if you're in a comfortable enough financial position and have a nice amount of savings, you may not want to get another job to replace the one you lost. Rather, you might use your layoff as an opportunity to kick-start an early retirement.
Now not everybody will have this option. If you're behind on savings and can't afford not to work those few extra years, you'll need to come up with a plan for bringing in the income you expected your old job to provide. But just remember that there are different ways to earn a living, so if you're not having much luck finding another position, you might use this as a chance to start your own business (whether you need the money or simply want something to do with your time). The U.S. Bureau of Labor Statistics reports that seniors 65 and older are more likely to be self-employed than any other age group, so if you're banging your head against a wall trying to become reemployed, you may want to consider venturing out on your own.
Getting laid off at any age is never fun, but it can be particularly unsettling later in life. Knowing what to do if it happens will help you make the best of an otherwise rotten situation.
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