Many laboratory professionals – and their managers – would like to delay their retirements. I wrote about this in an earlier blog. However, this is often not an option for scientists, engineers and technicians who lost their laboratory jobs in the Great Recession. Many older laboratory professionals have experienced forced early retirement. They are competing in the job market with younger people who have lost their jobs and with job-hunting post-docs and graduate students. As a result, it is more difficult for older people to find new employment, particularly employment comparable to the job they lost. Many people are experiencing both financial and personal problems caused by what is, in their perspective, premature retirement.
If you are older and have experienced forced early retirement, you may be financially unprepared for retirement. Even if you are, you may be mentally unready for retirement and wish to continue to practice your profession, either on a full-time or part-time basis. What steps can you take to deal with these personal and financial problems caused by forced early retirement?
If you have the financial capacity to live largely on Social Security, a pension and withdrawals from your 401k plan, an acceptable alternative to conventional full-time employment may be consulting, working part-time or working in temporary positions. By providing income these alternatives may enable you to delay drawing on your personal financial reserves or collecting social security earlier and receiving reduced benefits.
The development of personal computers and modern communications has made it possible to conduct a thoroughly professional consulting business out of one’s home. Many other businesses can also be conducted out of a home office. For example, while I do some work in client’s offices, I do most of my consulting and technical writing in my home office, a spare bedroom furnished as an office.
Another alternative is to become more active in professional societies and organizations. For example, much of the volunteer work needed to keep the American Chemical Society functioning, largely governance and programming, is done by volunteers. I have a friend who is a member of not one, but three, Toastmasters clubs and is active in all of them. Of course, one isn’t paid for this volunteer work.
Then an unplanned retirement catches you by surprise, you may need to find ways to plug the financial gap created by an early retirement. Begin by learning exactly where you stand. Review your finances. Determine what your retirement income is. Track your monthly expenses.
Determine your monthly income. Besides pension and social security benefits, are you eligible for unemployment benefits? If so, collect them for as long as you can. If you received a lump sum severance package, don’t spend it; add it to your financial reserves.
Then determine how much you need to cover the basics: grocery, house and car payments, utility bills and gasoline. Talk to your children about them shouldering more of their college expenses.
Health insurance is a major concern. Secure COBRA coverage for your family’s health insurance if you don't have access to coverage through your spouse or some other program.
Determine what is a necessity and what is a luxury. Reduce or eliminate past expenses - especially those related to your work life. This includes much clothes shopping and dining out.
You To reduce your spending, you may need to cancel premium cable channels, health club memberships and plans to buy a new car. Although this remains a bad time to sell a house, consider downsizing your home.
If you're age 62 or older, your income options increase with the ability to collect Social Security and tap into traditional IRA accounts without paying a penalty. If you're under 59½, income options that won't trigger penalties are limited. Tapping certain accounts such as a Roth IRA you’ve owned for five years may be feasible.
Review all your investments and assets. Prioritize when it makes sense to begin drawing upon each based on your age. Given likely life spans, you don’t want to withdraw more than 4% annually.
Finding a job
While finding a job comparable to your last position may not be possible, you may be able to find a lower-paying position, a temporary position or a part-time job. Consulting may be an option. Can you be creative and turn a hobby into income?
The key to happiness in unplanned retirement
The key to happiness in unplanned early retirement is to plan for the eventuality before it happens. Then it won’t be such an emotional and financial should you experience unplanned early retirement.