Moneywise and Yahoo Finance LLC may earn commission or revenue from the links below.
Announcing retirement months in advance is often considered a courtesy to the company. Not only does it give your employer time to manage the transition and hire a replacement, but it also gives you enough time to get your personal finances in order.
But what happens if, shortly after you announce your retirement, your employer decides to lay you off before your official end date?
If you have announced your retirement, being suddenly fired after many years of service can be a frustrating and disorienting experience. It’s natural to want to know if your employer is breaking the law.
As surprising as it may sound, your employer generally does not have any legal obligation to keep you employed once you have announced your plans to retire.
An American Association of Retired Persons (AARP) analysis of data from the Urban Institute and ProPublica Health and Retirement Research (HRS) reports found that 13% of older workers unexpectedly entered retirement, which researchers say suggests workers may be forced out of their jobs(1).
This is because most states have at-will employment laws. Any employee can be fired at any time, for any reason, without warning – no “just cause” required.
However, if you have evidence that your employer fired you to prevent your pension from “vesting” or as a direct result of age discrimination, you may have some legal recourse. These actions violate the Age Discrimination in Employment Act (ADEA) and the Employee Retirement Income Security Act (ERISA), and you may find yourself in a situation like this.
Read more: Nearing retirement but no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)
If you are laid off before your official retirement date, you have several options.
Your company may offer severance as a way for you to give up your rights to bring certain lawsuits against your former employer. Aim to negotiate a severance package that is as fair as possible, including requiring your employer to continue subsidizing your health insurance. Otherwise, you may be forced to take out private health insurance to cover employment gaps.
Another option is to apply for continued health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) (2). However, COBRA coverage is only available to group health plans with at least 20 employees. In addition, eligible individuals may be required to pay the full premium for their coverage, up to 102% of the plan cost.
The main advantage here is the continuation of your health care plan, but the price tag can be a major disadvantage depending on your financial situation.
To understand where you stand, you may want to consider speaking with a financial advisor to understand how being laid off will affect your retirement plans. If you have the financial means to retire early, a financial advisor can help you plan for your golden years.
If you’re not sure which path to take in today’s market uncertainty, now may be a good time to connect with a financial advisor through Advisor.com.
This online platform connects you with vetted financial advisors who can help you create a new wealth plan.
Just answer a few simple questions about yourself and your financial situation, and the platform will match you with up to three experienced financial professionals. You can view their profiles, read past customer reviews, and schedule an initial consultation for free, no hiring required.
As retirement age approaches, every dollar starts to matter more.
Rising medical costs, economic uncertainty, and living on a fixed income—making your savings last can feel like a challenge.
That’s where AARP comes in. AARP is a trusted organization for many older Americans. You can get discounts on just about everything, from prescription drugs and dental plans to travel, entertainment and insurance.
Even better, AARP members have access to guides to help you get the most out of Social Security, choose the right Medicare plan, and discover other government benefits—potentially saving you thousands of dollars.
Join AARP today and get 25% off your first year.
By being proactive, you can hopefully ensure that your employer’s decision to force you to leave your job early doesn’t derail your retirement goals.
“You may not have 40 years left, but you have today. That’s enough to start turning things around,” noted financial guru Dave Ramsey told Kiplinger.com (2).
Creating a financial buffer can help you get through this challenging time without affecting your lifestyle or taking on additional debt. You may want to invest in safe-haven assets like gold, which tend to deliver stable returns over time, while hedging your portfolio against inflation and recession risks.
One way to invest in gold and offer significant tax benefits is to open a gold IRA with the help of Hartford Gold Corporation of America.
A gold IRA allows investors to hold physical gold or gold-related assets in a retirement account—combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those looking to hedge their retirement funds against economic uncertainty.
Even better, you can roll an existing 401(k) or IRA into a Gold IRA, often for free, and enjoy free storage, maintenance and insurance for up to three years. To learn more, get your free 2025 Precious Metals Investing Information Guide.
Also receive up to $25,000 in free silver with qualifying purchases.
But make sure not to put all your eggs in one basket. If all your money is in stocks or precious metals, emergency expenses may force you to withdraw money or go into debt during a market downturn.
If you don’t have a steady source of income, financial experts like Ramsey recommend keeping at least 12 to 18 months’ worth of expenses in an emergency fund.
“While it’s critical to save adequately for retirement, an emergency fund ensures steady income no matter what happens—a health issue, home repairs, or a market decline,” says Marty Burbank, founder of OC Elder Law (4).
“Retirees can’t predict future costs or market changes, but an emergency fund can help ensure the financial security to get the most out of retirement.”
Keeping emergency funds in a high-yield savings account helps ensure your money remains accessible while earning interest.
For example, you can earn up to 3.90% APR (base APR of 3.25%, with an increase of 0.65% for the first three months) with a Wealthfront Cash Account through Plan Bank. That’s about 10 times the national savings rate, according to the FDIC’s January report.
The Wealthfront Cash Account also lets you pay bills, set up direct deposits, and cash checks while earning high interest rates.
With no minimum balance or account fees, along with 24/7 withdrawals and free domestic wire transfers, you can be sure your funds are always available. In addition, the FDIC insures Wealthfront cash account balances up to $8 million through program banks.
We rely only on vetted sources and reliable third-party reports. For more information, see our Editorial Ethics and Guidelines.
AARP (1); Department of Labor (2); Kiplinger.com (3); Go Bank Rates (4)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
