I’m 61 and being ‘invited’ to retire due to cost cuts — my role will be reduced to busywork and leadership sees me as savings. How do I cope with the emotional toll of a ‘forced’ exit?

The emotional toll of forced retirement

A 2024 Transamerica survey found that 58% of retirees left the workforce sooner than planned. Among them, 43% cited job loss, organizational changes or retirement buyouts as the cause.

While any retirement comes with adjustments, an unexpected one can feel like a gut punch. Dr. Riley Moynes outlines four phases of retirement, but when retirement isn’t your choice, those phases take on a different shape.

• 1. The Vacation Phase – Typically, this is when retirees enjoy their newfound freedom. But if you weren’t ready to leave, it might feel like anything but a vacation. Focus on self-care, and if possible, take an actual trip to clear your mind.
• 2. The Lost Phase – Many retirees start to miss the sense of purpose and structure their jobs gave them. Establishing a routine — whether through volunteering, hobbies or regular outings — can help. Even something as simple as breaking up errands can create a sense of structure.
• 3. The Trial and Error Phase – This is when retirees explore new things, and realize that not everything will be fun. For example, you may decide to sign up for a pickleball league only to realize you're not a fan of the sport. Don’t see it as a failure, but rather as an experiment.
• 4. The Reinvest and Rewire Phase – This is where many retirees find their stride, controling what you want your post-career life to look like. Whether it’s strengthening relationships, finding new social circles or diving into passion projects, this phase is about shaping your retirement on your own terms.

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Managing your finances after a forced retirement

Only 21% of workers who retired early did so because they were financially prepared, according to Transamerica. In reality, many older Americans struggle with retirement savings — the Federal Reserve found the median retirement savings for those aged 55 to 64 was just $185,000 as of 2022.

If you’re facing an unexpected retirement, here’s how to manage your finances:

• Assess your assets – Identify which funds you can easily access without penalties. IRA and 401(k) withdrawals before age 59 1/2 typically incur a 10% penalty, but if you leave a job at 55 or later, you may be able to tap into that employer’s 401(k) penalty-free.
• Check your Social Security options – You can claim benefits as early as 62, but doing so reduces your monthly payout for life. If you have savings, delaying until full retirement age (67 for those born in 1960 or later) could be a smarter move.
• Figure out health care coverage – Medicare coverage doesn’t begin until age 65, and the Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage, while an option, can be expensive. Depending on your age, buying a plan through the health insurance marketplace may make more sense, especially if you need more than 18 months of coverage until Medicare kicks in.
• Create a budget – Early retirement might mean trimming expenses. But remember, once Social Security benefits start, your financial situation could improve. In the meantime, adjusting your lifestyle can help ease the blow of a more bare-boned lifestyle if early retirement.