What to Do if You Suddenly Need to Retire

Here’s how to cope with an unexpected early retirement.


The recent economic downturn has many people murmuring, "I will be working forever." But the reality is that many of us will be forced to retire unexpectedly in our sixties. From layoffs to disabilities or other health-related issues, working forever just isn't in the cards for practically all of us.

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Having to retire without warning, of course, can catch us off guard. If you suddenly find yourself forced into retirement earlier than planned, here’s how to cope:

Simplify your list of accounts. By the time you reach your 60s, you probably have multiple investment accounts as well as checking accounts, savings accounts, and other investments, which can make planning extremely difficult. It takes time to manage all these accounts and each probably has different rules that you must comply with to avoid fees. Take the time to simplify and organize your financial picture so you can make appropriate decisions going forward. Once you begin drawing down your savings it's crucial to get the withdraw amounts right if you want to make sure that your nest egg lasts throughout your lifetime.

Get a grasp of how much you spend. Estimate how much you are spending on a monthly basis, and see if your current savings is enough to meet those expenses throughout retirement. Those who have saved enough to cover their monthly bills can focus on enjoying retirement. Retirees who don’t have enough to maintain their current level of consumption need to look for ways to reduce monthly spending.

List ways to cut expenses. When we are working, we sometimes spend extra money to save time or out of habit. Many early retirees will need to cut costs in order to live within their new monthly budget. Using coupon codes when shopping online, refinancing a mortgage, and calling the cable TV provider to ask for a lower rate are all things that can help you stick to your budget. Now you have the time to start completing these money-saving tasks.

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Start looking for part-time work. There are lots of ways to make more money, and this is a good time to look for additional income. But don’t take a job just for the cash. Many people find retirement more fulfilling when they are doing something productive.

Remember to ask for help. There's no shame in asking for help when you need assistance. Many of your friends will probably be able and willing to help. You social network might be able to refer you to a part-time job or a financial planner who can help you transition to full-time retirement. Don't be afraid to ask.

Create a plan to spend the extra time you have. You will most likely have more time on your hands than you will know what to do with at the beginning of your retired life. Figure out what you want to do, and don't spend your days sitting in front of the TV. No matter what your age, life is so much better when you are active.

[See How to Cope With a Forced Retirement.]

Don’t panic. It's natural to panic when retirement is suddenly thrust upon you. But early retirement might actually be the best thing that could have happened to those who have been savers. The key is to assess your situation and develop a plan for moving forward. Once you know what to do, you can develop a new routine. At the very least, you won't have to ever set your alarm clock just to wake up early and attend really boring meetings that are a waste of your time.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.