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The Dreaded Question: “So, What Are You Doing These Days?”

Tim stood there nearly frozen after a former colleague asked him this question. The two hadn’t seen each other since Tim was let go from his corporate job three years ago.

“Well, believe it or not … I’m retired,” Tim said, timidly, his words hanging in mid-air. Obviously embarrassed by his omission, he added, “It sure isn’t like the old days, when there weren’t enough hours in the day, I can tell you that.”

Tim’s transition into an involuntary retirement hadn’t been an easy one. Still troubled by shock, frustration, anxiety and anger, his job loss at 63 stifled any type of real comeback for him. And so, he withdrew. Like so many others who are still involuntarily unemployed due to COVID-19 today, Tim’s confidence level was severely bruised.

Typical – Yet Individual – Struggles Remain

If you have experienced it you know. When you lose a job there is an adolescent reaction to asking oneself why he or she was let go and not anybody else. 

Can you ever plan for such an unfortunate occurrence? The short answer is yes, but it is tucked away in the “what if” category of your book of life. Truth is, you shouldn’t take life ­– or employment – for granted, should you?

According to Tim, he was not in the category of being “tired of or dissatisfied with work,” as so many employees his age freely admit. In fact, his performance reviews were good. Luckily, he planned smartly for this eventuality like he planned for his retirement.

We All Respond Differently to Change

Past research showed that 25 percent of retirees experience a decrease in their sense of wellbeing during the transition to retirement, according to Megan Giles, at

A Health and Retirement study revealed that half of retirees reported being somewhat or not at all satisfied with their retirements. However, some retirees underestimated how long it would take to adjust to their new lifestyle; some missed their friends from work; others felt that without a career to define them, they had lost their identity.

So, Tim had to create a new identity. Not having to go to work, he had to develop new routines, including trying to find constructive things to do for himself, and learning how to spend more time with his spouse. 

While it is true that once an individual turns age 62 or 63, the temptation of receiving an income without having to work is a free pass out of the workforce that wasn’t available before then. Receiving early Social Security benefits becomes an option that was not available before reaching that age. The irony is you look forward to what is likely to be the least amount in benefits when compared to retirement plan distributions from your 401(k) or IRA. About a quarter of retirees depend on Social Security benefits for at least 90 percent of their incomes.

Obviously, anyone furloughed from a job wants and needs to return to some kind of work.

Whether they liked or disliked their job, they weren’t ready for the idle and stressful days.

Priorities First

If you were involuntary displaced from your job after spending almost 30 loyal years there, let’s say you have accumulated assets, starting with your employer-sponsored (employer-contributed) retirement plan – your 401(k). You may be out of work, but you are not out of retirement assets. Conservatively, you might have $550,000 or more in your plan.

If you are not of age to begin taking your Required Minimum Distributions, know that pending legislation – the new Securing a Strong Retirement Act of 2020 – may push your RMD starting date to age 75. Nevertheless, your current 401(k) plan sponsor held it for you all these years, so perhaps you should discuss with a Hefren-Tillotson advisor what the best options are for either rolling it over to an IRA or keeping the status quo.

Either way, the plan is continuing to invest for you. The question is: Can you do better elsewhere? The answer is: It depends on the investment line-up you currently have.

There is Light at the End of the Tunnel

Except for drawing early Social Security benefits, where is the money to live on coming from? You might know the rule of thumb is to replace 85 percent of your income in retirement. That is the typical target for most people in most cases, but not all.

Let’s return to Tim’s story for a moment. When he was let go, he received a severance with income tax taken out for 75 percent of one years’ salary. Was his company obligated to do this? No. While it is a great company policy, it is not a requirement to offer severances. He took money from his severance check to pay down their credit cards.

At 63, he draws early Social Security benefits – 25 percent less than he would by reaching full retirement age – based on his highest earnings. His wife, Mary, has full retirement benefits. A side gig limits his amount of earned income until he reaches full retirement age.

But, at 66, he can earn as much as he is able to and pay income tax like we all do. The key to it all is his lifeline: a well-funded emergency fund he and Mary paid into over several years. An emergency fund is saved money to help with financial dilemmas, such as job loss.

Your retirement is saved money too. It is America’s #1 financial priority. But retirement isn’t just about accumulating sufficient wealth – it is also about protecting those assets as well as growing them. Some people saved large sums of money for retirement, and others have not. It is never too late or never too little to start. Contact us at Hefren-Tillotson to learn more about how we plan for unforeseen occurrences with MASTERPLAN® today.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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