By Kate Ashford
Originally Posted On June 13, 2013
You’re in the prime of your life, just a handful of years from retirement. So what do you do if your employer gives you a pink slip and sends you on your way?
It happened to Robert (his name has been changed for privacy), now 62, about a year and a half ago. “I thought, ‘I am not ready in any way to be without a job,’” he says. “I was too young to be retired, I wasn’t ready to be retired, and I had to start looking for something else. And it became apparent pretty quickly that another job wasn’t going to come along in a hurry.”
The hunt for a new job at 60 can be daunting. After all, your age and experience may mean you'd come with a fairly expensive price tag, making you a less attractive candidate to some employers than applicants in their 20s or 30s. Many employers don't leap to hire people in their 60s.
What to do? Financial advisers and career pros offer these seven pointers:
Gauge your financial situation. Before you dive into the want ads, “assess where you are financially,” says Sheryl Garrett, founder of Garrett Planning Network. “How long can you go without a paycheck before you’re broke? And what kind of income do you need in that next position?”
You may find that you no longer need to earn what you did at your last job.
Do some serious soul searching. Losing your job could be just the impetus you need to think hard about the type of work you want to do at this stage of your life. You may decide that you don’t want to work in your previous field any longer or that you don’t even want to work for someone else.
“When I asked a client who was a hospital administrator, ‘What would you ideally be doing?’ he told me he wanted to have a bait and tackle store,” Garrett says. “It’s not out of the question to consider a position in a whole new field that would give you personal satisfaction.”
Consider setting up shop. At your age, with your experience and expertise, you might be in the perfect position to hang out a shingle or act as a consultant in your field.
If so, start by creating a business plan. Then look for experts who can act as a sounding board, like ones from SCORE, a national nonprofit affiliated with the U.S. Small Business Administration that counsels small businesses. (You’ll find some practical SCORE articles for entrepreneurs in the Launching a Business area of Next Avenue).
You might also find a community college class that can teach you how to start your own business. “A lot of adult education classes are specifically geared toward this,” says Eileen Freiburger, a financial planner in Manhattan Beach, Calif.
When you go out on your own, it helps if you are covered by your spouse's health insurance plan, at least until Medicare kicks in at 65. But there are other ways to score benefits. For instance, you could take a part-time job that provides health insurance while you’re building a business on the side. Says Garrett: “A couple of friends of mine went to work part-time for Starbucks.” (Employees of Starbucks get health coverage if they work at least 240 hours per quarter.)
If you look for another job, plan on a smaller paycheck. After layoffs, men and women 62 and older who return to work collect paychecks that are 36 percent less than their previous salaries, on average, according to the Urban Institute. For those 50 to 61, the average pay cut is 20 percent.
That’s not so surprising when you consider that an employee who has been in the workforce for decades may be at the top of his or her field. So replicating that pay isn’t easy.
If you hold out for exactly the salary you just lost, you may never find it. Think carefully before turning down a great job that pays less, especially if your cash reserves are running low.
But if you really need that income, when you apply for a job, “it’s worth a heart-to-heart with the hiring manager,” Freiburger says. “Ask, ‘If I take this salary, could I expect a bonus? Is there anything I could do — such as accreditation or continuing education — to get up to the next pay tier?’”
You may need to take a full-time job regardless of salary just for the health benefits. “At this age and stage in life, health insurance may be as important as the paycheck,” Garrett says.
When interviewing, commit to the company. One of the disadvantages of being an older worker in a job interview is that you can’t plausibly promise the employer that you’ll be on board for the next 20 years. But this doesn’t mean you need to share your plan to retire in five years or so if that's what you're planning, experts say.
“During the interview, say, ‘I really want to be a part of this company,’” Freiburger says. After all, who knows? You may not be ready or able to retire as soon as you expect.
Rethink your retirement age. Maybe you’ve been set on retiring at age 65. Unfortunately, if you just joined the unemployment line, this goal may no longer be realistic.
“The idea of being 60 and almost ready to retire, it’s an illusion,” Garrett says. More than a third of workers expect to work past 70 or never retire, according to a survey by the Transamerica Center for Retirement Studies.
This doesn’t mean putting the proverbial pedal to the metal through your mid-70s, however. You might look for a full-time job that requires fewer hours — 40 per week, say, instead of the 60 you put in before you were laid off.
Or you might take a full-time job and gradually scale back hours, through a phased retirement. (Read the Next Avenue blog post, "Phased Retirement: What You Need to Know," for the pros and cons of this employment strategy.)
Figure out when to start collecting Social Security benefits. If you’re in good health and longevity runs in your family, financial planners often recommend waiting until full retirement age — currently 67 — if you can afford it, to maximize your lifetime benefits.
You can generally start taking Social Security at age 62, but you’ll see bigger checks for each successive year you wait — even after your full retirement age — until you reach 70. “Assuming you have a reasonable retirement nest egg, you may be better off spending down your investment portfolio for a few years in exchange for waiting to collect Social Security in your late 60s,” says Rick Kahler, a financial planner in Rapid City, S.D.
Social Security’s online estimator tool will let you see the approximate size of your monthly retirement checks based on your actual earning record. But it pays to have a financial adviser run the numbers to determine the best time for you to start collecting benefits.