As the New Year is upon us, new goals and new visions are being created to make this a prosperous and successful 2017. Perhaps you are in the later stages of your career and are consciously developing a succession strategy for your role to ensure a smooth transition when you do retire. Ever thought what would happen if you were forced into retirement well before your succession strategy could ever be executed?
Imagine you have spent countless years growing your career, contributing to the success of your company, mentoring new employees and navigating between all the politics, only to be replaced by a young enthusiastic “Whipper Snipper” fresh out of university.
Firstly let’s be honest, it does happen and it happens often, however, this article is not about age discrimination, it is about how to navigate the waters when retirement happens earlier than expected.
Here are a few helpful tips:
Negotiate a retirement package if possible
If your contract is not being renewed or retirement has been strongly suggested to you, it would be wise to negotiate a retirement package. Perhaps it could be three to six months’ salary or being allowed to stay on the health insurance with the employer covering 100% of the premium, but trying to get something out of the situation is important while you get your feet back on the ground.
Visit a retirement planner or advisor
You will need to meet with a professional who can give you an independent view on how much you will need to retire. Perhaps you will be better off than first expected or perhaps you need to make some life changes quickly in order to survive. The goal here is to look at your finances as a whole and determine what you need to do for a stable future.
Determine How You Are Spending Your Money
When times are good, most people do not think as much about how they spend money, they don’t pay attention to daily spending. How much do we spend going out to eat? What is our weekly grocery bill? What about utilities and insurance? Being more aware of how you spend your money will cause you to spend it more carefully and allow you to determine any reductions that could be made.
Cut back financially
If you have been forced into retirement then you will stop receiving a pay cheque and will need to come up with a plan for cutting back expenses. Develop a budget that eliminates most unnecessary expenses, but don’t completely cut entertainment. You need to maintain your spirits and keep up with contacts should you be still looking for work.
Downsize now not later
If your plan in retirement was to downsize the family homestead and buy a smaller property and use a portion of the equity from the sale to fund your retirement, then perhaps now is the time to implement this plan. This might provide the additional retirement funds that you needed, and the only difference is you executed your plan earlier than scheduled.
Find Part-Time Work
You will be able to stretch your savings if you have additional income. Consider part-time work, this could provide the supplemental income needed to at least cover your health insurance or other expenses.
I recommend to all my clients younger and older that they need to start putting additional money into their company pension plan. Whether it’s an additional 1% deduction off their pay cheque per month or additional $500 per month, making voluntary contributions is the easiest way to build retirement savings.
There are no golden rules on how to handle being forced into retirement, but what you can do is recognize that it does occur and you need to financially prepare for it in case it does happen.
Published in Bernews, January 5, 2017