Losing a job is never easy, but when it happens later in life, the challenges can feel even more daunting. Many people in their fifties are juggling significant financial responsibilities, such as mortgages, supporting children through college, or assisting aging relatives. When people are laid off, it can be difficult to find a new job with comparable pay and benefits. As workforce reductions continue, this concern grows in both private and public sectors.
Why It’s Such a Problem
For workers in their 50s and early 60s who want to continue working, being laid off frequently results in more extended periods of unemployment. According to the United States Bureau of Labor Statistics, job seekers aged 55 to 64 spend nearly 26 weeks on average looking for new employment. That is approximately 7 weeks longer than their younger counterparts aged 25 to 34.
Furthermore, people who are laid off in the middle to late stages of their careers are less likely to successfully transition to a new industry than those who leave jobs voluntarily. Some people end up dipping into savings or starting Social Security earlier than planned, reducing their overall retirement income. They also do not contribute to retirement plans such as 401(k)s or IRAs, which are significant catch-up contributions for those over 50.
Why Finding a Job Takes Longer
Age bias in hiring persists. Some employers incorrectly assume that older workers are less adaptable to new technologies or that they will retire soon after being hired. In reality, many older professionals want—and need—to continue working well into their 60s or beyond. Still, it may take longer for them to find a new job, and salary negotiations can be tricky. Older workers may expect higher pay, and employers may be hesitant to meet those expectations.
There’s also a numbers issue: senior-level positions such as director, vice president, or manager are less common than entry- or mid-level positions. To increase their chances, older job seekers can leverage their professional networks, stay active in industry groups, and maintain a visible presence on social media platforms such as LinkedIn.
Average Retirement Age
If you are laid off in your fifties, you may feel like you are falling behind—especially since more Americans are working longer hours than ever before. Since 1991, the average retirement age has increased by about three years, owing to longer life spans, improved health, and a shift toward less physically demanding work.
At the same time, the transition from traditional pensions to 401(k)-style plans has made many people feel less secure about their financial future. The average age for claiming Social Security benefits has also risen, from 63 to 65 in the last two decades. That is generally good for income. According to the Social Security Administration, each year you wait to collect benefits between the ages of 62 and 70 increases your monthly check by up to 8%.
Retirement Expectations Vs Reality
Working longer hours, either at your current job or looking for something new after retirement, is a common strategy for increasing retirement security. One way to accomplish this is to take on a reduced role, such as part-time or freelance work. It’s a flexible option that allows people to remain active without committing to a full-time job.
However, these positions are frequently only available to those with extensive specialized experience. And some may decide that the effort of a job search isn’t worthwhile if they only intend to work for a few years.
This is why starting early is so important. Knowing that you may lose your job later in your career makes a strong case for saving as much money as possible early on. Do you want to learn more about how to save and build income for retirement? We’re here to help. Guaranteed retirement income options (backed by the claims-paying ability of the carrier) may be worth considering. Contact us for more information.
Source: The Wall Street Journal (1), The Wall Street Journal (2)