More than 50% of the workers who entered their 50s with stable, full-time jobs were laid off or forced out at least once by age 65, according to an analysis of employment data from 1990 to 2016 by the nonprofit newsroom ProPublica and the Urban Institute. Only one in 10 of those who lost a job ever found another that paid as much, and most never recovered financially. How can you survive unexpected job loss in your 50s?
Considerable’s recent article entitled “5 strategies for navigating your most dangerous decade” says that these realities make it critical that you have a plan for surviving what could be your most dangerous decade.
Stay current in your field. You may want to just ease into retirement and switch to auto pilot in your last few years of your career. However, older workers who aren’t proactively updating and increasing their skill sets are more likely to be laid off. They may be the first to go. Seek out training opportunities at work and volunteer for new assignments. You can also ask to be both “a mentor and mentee,” where a younger co-worker helps you stay up-to-date with the latest technologies used by your office, and you can share you knowledge of the company and industry with them.
Save early, save often. “Catch up” provisions were added to help workers supercharge their savings in the years right before retirement. As a result, in 2020, workers who are age 50 and older can contribute up to $26,000 to workplace retirement plans, like a 401(k)s, compared with the limit of $19,500 for younger workers. This may motivate you to start saving as soon as possible and to increase your savings rate whenever you can. It’s also a good idea to bolster your emergency fund. The average length of unemployment for people 45 to 54 is about five months. In this pandemic and down economy, the time may be even longer.
No more borrowing. Many people see their ability to save blocked because of debt. Limiting how much you owe as you get older can provide you with more financial flexibility. If you’re refinancing a mortgage, get a loan term that lets you be debt free by retirement or earlier. Use care in borrowing money for education, either for yourself or a child, because those obligations typically can’t be discharged in bankruptcy and could be hard to pay back if you lose your job.
Cut the cord. More than a few parents provide their adult children with some financial support—typically for household expenses, not emergencies. These continuous gifts may wreak havoc with your financial health, as well as theirs. Create some clear financial boundaries to help you wean them off the distribution of the “Bank of Mom and Dad” welfare checks.
Move quickly. You may find another job soon if you lose your current one. If so, move ahead like you won’t by cutting non-essential spending, asking lenders about possible forbearance or hardship programs, and staying in touch with your network.
Using these strategies and preparing for the unexpected can help you survive a job loss in your 50s.
Reference: Considerable (August 1, 2020) “5 strategies for navigating your most dangerous decade”