Retiring on schedule can be a very exciting thing. In fact, you might enjoy getting to count down your final days in the workforce.
Being forced into retirement, on the other hand, could be the opposite experience. Whether it's due to health issues, corporate downsizing, or something else, it can be very troubling to suddenly find yourself out of a job without other prospects.
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If you've been forced into retirement this year, or you fear you're headed in that direction, it's important to acknowledge your feelings and give yourself time to absorb the bad news. But it's also important that you make these three moves.
1. Figure out what benefits you're eligible for
If you're forced out of a job, there may be certain benefits you're entitled to. In addition to weekly unemployment checks, you may be in line for severance from your employer, as well as compensation for unused vacation or sick days.
Make a list of the benefits you may be eligible for and pursue each one. That means filing a state unemployment claim and talking to your HR department to see what money your company owes you.
2. Assess your ongoing income sources
If you're convinced that your days of being able to work are over, then it's time to see what income you may be looking at for retirement on an ongoing basis.
First, create an account on the Social Security Administration's website so you can get an estimate of your monthly benefits. You may not want to claim Social Security right away after being forced into retirement, because filing for benefits prior to full retirement age reduces them permanently. But it's a good idea to see what monthly benefit you're entitled to at different filing ages.
Next, assess your savings. A $500,000 IRA balance might seem like a lot of money, but you may need that sum to last for many years. As such, you may only want to withdraw 3% or 4% of your retirement account each year, depending on the investments you have.
Once you've totaled up your various income streams, you can compare that to your monthly expenses. If you can cover your bills, you should be relatively set. If you're worried about a shortfall, you may need to consider some changes, like downsizing or relocating.
3. Set yourself up with health coverage
Going without health insurance for any amount of time is a bad idea. If you're at least 65, you'll generally be eligible for coverage under Medicare.
If you're younger, though, you'll need to bridge that gap until Medicare kicks in. That could mean buying coverage through Healthcare.gov or seeing if you can swing the cost of COBRA, which allows you to keep your employer health insurance for a limited period of time.
If you're a few months away from being eligible for Medicare, you may be inclined to take your chances and hope nothing bad happens. Don't. A single accident could leave you with thousands of dollars in ER bills, so it's not worth taking the chance.
It's not fun to be forced into retirement when your plan was to keep working. But if that's become or becoming your reality, then it's important to approach the situation in a level-headed manner so you're able to manage financially.
