Laid Off Before Retirement? Here's What to Do

Have you recently been laid off and aren't sure whether to find another job or retire?

In this episode of Retirement Roadmap, Mark Fricks and Evan discuss the financial decisions that become especially important when a late-career layoff changes your retirement plans. From evaluating your income needs to understanding Social Security, healthcare, and retirement account rules, they explain practical steps to help you make informed decisions during an uncertain time.

Join us as we explore strategies to help protect your retirement, avoid costly mistakes, and determine whether it's time to return to work—or whether you may already be closer to retirement than you realize.

Topics include:

00:00 Introduction
00:35 Why Late-Career Layoffs Are Different
03:35 Evaluate Your Spending & Income Needs
05:16 Retirement Accounts, Age Rules & Penalties
07:00 Why Having a Retirement Plan Changes Everything
10:00 Choosing the Right Income Sources
11:09 The Rule 72(t) Exception Explained
13:15 Return to Work or Retire Early?
14:40 Part-Time & Consulting Opportunities in Retirement
17:30 Final Thoughts

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Call 770-980-9262 to speak directly with someone about your retirement planning needs.

https://masterplanretire.com/

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Purchase Mark’s book, The Road Less Traveled: Turning Your Retirement Worries Into an Excursion of a Lifetime, on Amazon: https://a.co/d/4fx94Al

Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants. The aforementioned are affiliated companies.

Transcript

Welcome And The Layoff Reality

SPEAKER_00 0:16

How do you navigate a late career layoff? Hey folks, welcome back. Thank you for joining us. This is Master Plan Retirement Consultants Retirement Roadmap. My name is Evan, and with me as always, retirement planner Mark Fricks. During this episode, we'll walk through practical steps for workers who find themselves laid off close to retirement. Mark, more than 60,000 people were laid off in March of 2026 with job cuts hitting hardest in transportation, technology, healthcare industries. We've seen this firsthand with some of our clients as well when they are within a few years getting close to retirement, they've been building up their plan, they've been saving for their retirement date, and then an untimely uh message from Boss comes through and they they're laid off. And the closer you are to retirement, there's you know, there's that buffer zone where you feel like I'm not quite ready yet. But Or you don't have the confidence. Yeah, yeah. So we're gonna talk about that today. Some uh some options, some things to consider if you find yourself in that sort of situation.

SPEAKER_01 1:17

Yeah, and it seems to happen mostly to people that like middle management. They've been there 25, 30 years, they keep the younger folks making less money. Right. And then say, hey, you know, we know you're two years from Thankfully, most this is gonna be a weird statement, okay. From that standpoint, thankfully most people don't have a pension anymore. So I remember years ago they would lay you off like one year away from being eligible for your pension or something. That was horrible. Yeah. So now at least you have your 401k and things like that. But yeah, they do many times chop off that middle to even upper man uh upper management positions. They save a lot of money. And that's where companies tend to get kind of overweighted uh when times are good as well. So yeah, it's a common problem. We saw it a whole lot in 2008 through 2011. Uh I can remember a couple of clients that were uh five years away, you know, and and they were making six figures pretty easily. And um, you know, they didn't want to turn on Social Security because they wanted to get another job. They looked and looked and looked, and finally three years later had to just bite the bullet and and take off, you know. So it's it's a problem that will not go away.

SPEAKER_00 2:24

Yeah, sure. It's gonna happen and will continue to happen.

Are You Actually Ready To Retire

SPEAKER_00 2:27

Um but one of the things we'll have to discuss today is um if you are laid off close to retirement, evaluate your financial situation before deciding, okay, whether or not it's time to seek a new job. Or do we retire early? And that's going to um you have to consider multiple financial situations as also your age is an important factor. Um and not just 59 and a half. Right. Um even 65 is a big landmark because we know um Healthcare. Healthcare is a massive, especially now, as expensive as it's gotten. That's one of our biggest considerations talking to clients about retiring early. Well, what are you going to do for healthcare?

SPEAKER_01 3:03

And then and then you have the question, are you getting a severance?

SPEAKER_00 3:06

Yeah.

SPEAKER_01 3:07

Maybe you're getting paid for six months or a year. I I had one client, and I won't say who they worked for, but there have been rumors of layoffs. He bypassed the first one, he bypassed the second round, third round came around, it was actually a bigger offer. He was closer to the right age. Yeah. And he I will never forget he left me a voicemail. So happy. You know, I got this money and I'm walking away. So it was really a cool moment. But like thankfully he had that opportunity and he was close enough to retirement. It's not always that happy over a proposition.

Pause Spending And Track Cash Flow

SPEAKER_00 3:35

Right. Well, one of the first steps to do if you are laid off close to retirement is before you make any decisions, pump the brakes on spending. Conserve what you have while the dust settles because every dollar saved is buying you time and buying you options.

SPEAKER_01 3:50

Yeah, and look around what's going on. Are you or you uh, you know, do you have too many streaming systems, you know, streaming sub subscriptions going on, things like that. Um track track your spending for a c a month or two. We don't realize what we're spending our money on. You know, it's really a uh and and cancel some things. Maybe you don't need all these things you had before. Uh but I think that's a great point, is start looking at where you can cut spending um and just uh you know, every every dime not going out the door is an extra dime, like you said, either in your pocket or that you don't have to come up with later.

SPEAKER_00 4:21

Yeah, and and your first step really is also what your first one of your first steps in retirement planning is run the numbers. How much do you really need per month?

SPEAKER_01 4:29

Yeah, take a look at least three months back. And and and you know, we have a great spreadsheet, Evan. I think you've got one you use as well that has uh all these areas listed that we normally don't think about. Oh, I didn't think about uh I get a cup of coffee every morning on the way in. You know, that adds up big time. I didn't think about I I eat uh uh I eat out at lunch instead of bringing my lunch. That's a big that's a lot of money right there. And you start tracking all that and you really uh realize how much money is going at the door that it's not a necessity.

SPEAKER_00 4:58

It's it's it's fun or it's good or or it's easy or it makes life easier, but now it's time to batten down the hatches or go to the mattresses as a once you've kind of determined what your monthly need is as as your base, um then you need to start considering your income options, what's available for you.

Income Options And Account Access Rules

SPEAKER_00 5:18

Retirees who are at least 59 and a half can tap into their um qualified accounts, their tax advantage, retirement accounts, such as 401ks, IRAs, 403Bs, um, Roths. But those younger than 59 and a half, they will incur a 10% tax penalty for the 401k for most withdrawals from these accounts. Yeah. And one, yeah, g uh go ahead and explain that.

SPEAKER_01 5:41

Well, yeah, if you've got a 401k and you've left that company either through retirement or separation or whatever, uh, this is the point Evan was getting ready to bring up, and I interrupted him. But uh you can't access in many plans your 401k after age 55. Right. And so don't let somebody come along and roll 100 percent of your 401k into an IRA. Now you have a penalty.

SPEAKER_00 6:02

Um, if you're 55 between 55 and 55.

SPEAKER_01 6:05

Again, you gotta be careful. Don't don't don't do it alone. I mean get get some help. Um because there's so many different laws and things going on. Um apply for unemployment.

SPEAKER_00 6:14

Yeah.

SPEAKER_01 6:15

You know, step one, it's not a lot, but it it's something. Uh look for part-time work, and you may be going through all this stuff here.

SPEAKER_00 6:21

No, this is good. And because it it really is such a specific case-by-case basis because there's so many factors between a person's need, a person's age, how close they were to retirement, the likelihood of being picked up back up, or what kind of job you would be looking for if you're not ready to retire. Um Maybe you're close enough you can find something part-time. Yeah.

SPEAKER_01 6:43

Uh, you know, just to fill a void, or at least maybe while you're looking again. Again, how you just said it, how close are you are you to retirement? And how close are you really to retirement? Maybe you've never really run some real numbers like we run for folks. Yeah. Just like the reports we run for for uh for folks. You that are listening, watching uh today, we'll go ahead and mention it. Our website is masterplanretire.com. And on there there's this little button that says schedule a a meeting. And so it's complimentary, and we basically have a chat initially, right? Kind of find out more about your your dreams, your goals, your fears. One of your fears is, hey, I just got laid off, right? Um and then let's run some numbers and see maybe you are okay. Maybe nobody's really run the real numbers, you know, what and we'll help you determine what you need per month. We'll we'll maybe help you a little bit with what can be cut, what will change, you know, when you're not working anymore, some expenses go away, right? So what does go away? Maybe your house is gonna be paid off in four years, you know. Can we accelerate that a little bit? There's so many things to look at, but those reports are complimentary and it will show you where you're at. This is whether you're facing being laid off or not, of course, but it just today's show being that. Um but find out where you're at, and part of that can be these reports we run. So masterplanretire.com or the old-fashioned way, 770-980-9262. And we do um take appointments over the phone.

SPEAKER_00 8:07

So and Zoom and everything else you can imagine. Absolutely. Um, I'm giving a lot of points on income and things to consider, but really, just like our clients, when we're creating a plan, you need an income plan. Um if if the worst happens and you lose your job or laid off uh if our clients are in that situation or a client is happens to find themselves in that unfortunate situation, the adjustment is typically much simpler because they already have an income plan laid out, they already have their numbers, they already know what they need. It's way easier to look and see, okay, this is where we are, this is where we need to be, this is what we need to solve for, it's already laid out for. So a lot of what I'm saying and and giving ideas are things that um really need to be in place already for a complete retirement plan. You should already have these numbers. So yeah, um, if you're curious at all about your own retirement, check out the website. Uh Mark is right, those complimentary consultations are super helpful. Um, and those are no strings attached, it's just an opportunity to get a better viewpoint of your own retirement and get organized and and really know where you stand.

SPEAKER_01 9:12

Well, an example, you know, uh we have a client, they've been probably a client about a year, they're still in phase one of putting that roadmap uh roadmap together. But we were talking last night during a Zoom call, and he said, Mark, uh she's retired this month. Uh she took part of the government buyout. But he said, Mark, I just don't know if I can make it, you know, another year and a half. So I said, Well, let's take your income plan, which we already have, and I said, Let me make some adjustments, let's update the numbers, and let's see if we can close that gap and you can get out of there by the end of the year, because that your life's too short, stress is too strong. That's that's a health concern right there. So but it you could see he just kind of went, yeah, yeah, okay. So maybe I can. I said, you know, I th I think you can, but let's run the numbers. Yeah. So it's kind of cool.

Social Security Timing And Earnings Limits

SPEAKER_00 10:00

So after you've considered your income options, uh be do be careful turning on income that isn't reversible. So look first at flexible sources, general savings and and emergency savings if you have those, of course, that's the perfect first step back up. Um potentially even home equity, we touched on that a little bit. Um, but before tapping into your retirement accounts, again, it depends on your age. It depends on where you are, how close you are to social security age. You also don't want to turn that on too early if you think you might be going back to work, um if you have retirement accounts that can bridge the gap so you're so you can wait on social security a little longer. There's a lot to consider. And none of them are in a vacuum.

SPEAKER_01 10:42

No, they're not. Every every situation is different. That's why we love our job, is because it's never the same with any client. Um, but just to reiterate what you're saying, if you turn on Social Security, let's say you get laid off at 64, you turn it on, and then a year later you get an offer to go to another company or maybe do consulting work. You have a limit on how much money you can take if you're on Social Security before age 67. So that's a that's a decision you gotta be careful

72T Withdrawals And Tax Consequences

SPEAKER_01 11:06

with.

SPEAKER_00 11:06

There's also some really interesting tools that are not fit for everybody, but um there is something called the substantially equal periodic payments. We call it the 72T. Right. Um but it's uh an option for if you are under 59 and a half, you can actually take penalty-free withdrawals from your IRAs um before 59 and a half and no penalties. Yeah, and it basically it is substantially equal periodic payments every year. Um and it is the greater of five years or fifty-nine and a half, right?

SPEAKER_01 11:40

Right. If you turn on, if you start them at age 52, you've got to keep taking them to at least 59 and a half. Uh if you start them before five years, let's say I'm 57, I've still got to keep doing it for five and five years, yeah. So and they're they're basically roughly four to six percent of your IRA balance. That's a rough estimate. That's two or three different ways you can calculate that. Um but you are tied to keeping it going for five years or like we said earlier, fifty-nine and a half. So make sure it's what you want to do. Um and we've used it several times, sometimes just to convert money, uh, sometimes because they needed it.

SPEAKER_00 12:16

Yeah. We've done it for yeah, for both, and converting money to more tax-efficient vehicles. Um but also keep in mind if you are at the age that you really are just trying to find a gap filler and you do anticipate going back to work, that's going those withdrawals of 72 with uh 72T withdrawals will continue. Even if you get a new job, that's going to add to your income. You'll be in that much more of a higher tax bracket.

SPEAKER_01 12:42

Yeah. So again, a decision that can't be made in a vacuum has to be all together with everything we've talked about so far.

SPEAKER_00 12:47

Yeah. Yeah. But uh is it true that people of any age can utilize that option? Mm-hmm. So Yeah.

SPEAKER_01 12:53

One time I had a 30-something-year-old do it, because they just want they had a big IRA and they wanted to start getting it out then into more of a tax-efficient uh vehicle.

SPEAKER_00 13:00

Then you're locked in for a long time.

SPEAKER_01 13:02

You're locked into 59 and a half. You gotta think about it. Yeah, that's a lot. That's a commitment.

SPEAKER_00 13:08

Man.

SPEAKER_01 13:08

It's like right behind marriage. Right. Yeah, right. Yeah, of course.

SPEAKER_00 13:12

It's pretty close, longer than some marriages. Um, once you've ran those numbers, you you gotta make the deliberate decision. Are you gonna go back to work or is this actually early retirement? Either way, it's better to know than to assume, or to just kind of float around, I'm not sure what's happening. But again, we've also got to reevaluate our social security strategy. We didn't dig too much in this, but we don't want to take social security too soon just as a knee-jerk reaction. I mean, you can turn it off, um, but starting benefits at 62 can result in a permanent 35 percent reduction in your monthly payment.

SPEAKER_01 13:45

Um Yeah, and another idea too, I don't know if we're done with the social security discussion or not, and we can certainly come back to it. But always you know, if you're married, you have a spouse. I would assume that way it works, right? Yeah, it's a bit of a. If you're married, you have a spouse. Yeah. So if you have a spouse, maybe they can go back to work. Maybe they have some skills they can utilize. And then, you know, maybe they've been out of the workforce, maybe they can increase their workload or whatever it may be as well. So there, you know, many times you have a team working together for something like this. So that's uh, you know, and then maybe that's a point you're gonna bring up later as well. Um but uh and plus if you're home and you have children, stop the child care.

SPEAKER_00 14:21

Yeah.

SPEAKER_01 14:22

Uh, you know, that's a younger position typically, but again, just just these ideas you have to think about. It's just um again, we gotta determine is it is it a short term, a long term, is this gonna launch us into retirement, or is this gonna be something we've got to bridge that gap?

unknown 14:37

Yeah.

SPEAKER_01 14:38

That's gotta come into play.

Part-Time Work And Contracting Ideas

SPEAKER_00 14:39

And if you are closer to retirement, consider fractional jobs, contracting, where professionals do high-level work on a limited basis. You know, we've got a lot of clients who either get bored or just are in retirement, someone reaches out to them from their old old job and they all of a sudden are making a lot of money doing contracting work part-time, you know, seasonally even.

SPEAKER_01 15:00

Trevor Burrus, Jr.: And if companies are laying these people off, maybe they're looking to replace them with part-time or consulting uh consultants they don't have to give all these benefits to um and things of that nature. So there may be some openings for that just because the industry is laying off that particular occupation. Aaron Ross Powell Yeah.

SPEAKER_00 15:15

I mean it's becoming much more common. It could be a strong fit for pre-retirees that have that deep level of expertise. Something else to consider too, um, if it works for your situation and you're getting closer to retirement, some pre-retirees find real satisfaction in part-time work tied to something they generally enjoy, like whether it's uh working at a golf club or a bookstore. I've got some clients who work at a garden center because they just enjoy it, you know. They they're they're not, you know, relying on that for their full paycheck, but it's that it's helping them bridge the gap and they enjoy it and they're they're stress-free hanging out in- They may be doing it at home anyway, garden. And they do.

SPEAKER_01 15:53

Exactly. So now they get a discount on their plants as well. Yeah, exactly. So uh I could tell you I I have a list of probably fifty different things we have we have clients doing that they enjoy, and they're doing it. Could they use the money? It's nice. Do they have to have the money? Not necessarily, but they're still young enough. I mean, you know, if you're in your 60s and 70s, you're young in today's, you know, society and and world we live in. And so I it's hard to just stop working. I mean, if I'm if I'm 65 and I just stop working, I don't think I'd live very long. That's just me personally. Uh but I'm just saying I've got to be involved in something and I love what I do, so I don't want to leave this. But if I didn't like what I uh what I do, uh again getting a job at a golf course and getting a you know a free round of golf every week because I work at a clubhouse or whatever it may be. Uh I've got, you know, we've got I I don't want this to get into a what can you do in retirement discussion, but I mean I could just tell story after story of folks that uh, you know, uh do something they enjoy like driving. Um I think I've told this story before, but I was at a uh a repair shop uh waiting on a part to get my car, car fixed. And the Snapper truck pulled up, this guy that had to be in his 80s got out and took the part in and went back and drove off. That's his job, is to deliver parts. He gets to drive around most of the day, walks 20 steps, 20 steps back, and and makes some money, and he enjoys driving, being out, you know, and about things like that. And that's that's just one example of of things you can do. Again, this uh this may be just a stopgap, something, but just ideas like that. And you know, as we were talking about this, this came into my mind. Maybe you just need to talk to somebody like us, not for us to necessarily solve all your problems, but just to bounce back, because we have so many ideas and so much experience dealing with this kind of stuff. And so maybe, you know, I I can remember when I was between jobs many years ago, and you know, I had a kid or two at home that were young, and this the feeling getting up in the morning of hope, but also desperation of I've got to get a paycheck going. And sometimes I just needed somebody to talk to and just say, you know, give me some ideas, uh, you know, throw some, you know, network with me or talk to talk to me, what can I be doing or whatever. We can be that for you as well. Well again, that first meeting or two, it could just be, let's talk about this.

SPEAKER_00 18:11

Yeah. And we started dipping our toes into the Social Security conversation on on kind of when to turn it on, whether to get a new job. But one thing to consider we just need to make sure we say out loud, is that uh if you turn it on too early, um you can't make too much money. So uh if you are turning in on Social Security before your full retirement age, then uh you can only make uh what's the limit.

SPEAKER_01 18:34

It's a little over 24,000 this year. I I can't give you the specific. But uh keep in that mind that that's money you earn. It's not money you take out of an IRA or anything like that. It's I went and got a job, I'm getting paid, it's being reported by 1099 or W 2, or maybe you have a small business you're running that counts toward earned income if you have a profit as well. So be careful.

SPEAKER_00 18:54

So again, that's you need to determine am I looking for a job, what's my timeline, or are we retiring? So you need to make sure you have that later.

SPEAKER_01 19:01

Or am I looking for a job that pays less than 24,000?

SPEAKER_00 19:04

Sure.

SPEAKER_01 19:04

That's the other thing.

SPEAKER_00 19:05

Yeah, uh just a nice under-the-table job, right? No. Um but you know, speaking but this popped in my head, I know we're kind of rambling, but there are so many different options. You know, there's a a local guitar shop that I frequent, um, and a couple of the guys there are retired technically. One does work there, you know, he he does pull a paycheck. The other guy is there just about as long, but he just hangs out. You know. And he'll talk to people about guitars and give them advice. I think he's probably he's probably sold more. I could see you do that when you're 75. I love it, hanging out. Uh you know, it depends, you know, how how it depends on the the atmosphere and if they'll if they like the guitars, if it's vintage enough. Trevor Burrus, Jr.: It's kind of like the old barber shop, I guess. Yeah, exactly. Yeah, for sure.

SPEAKER_01 19:44

Um I think our producer Ross, I think he probably hang wouldn't hang out at the mechanic shop or thinking.

SPEAKER_00 19:52

He's already got a spot. Yeah, he's already hanging out in the mechanic shop with the retirees. Um but there's so many options. And and again, I think one of the approaches is if you need if you have the option and the opportunity, find something that's going to genuin genuinely breathe life into you, something that's going to make your your work if you're able to, to to make it to make life happier and to to simplify um to make things a little bit more enjoyable for yourself and do make make most of the time, right? Yeah.

SPEAKER_01 20:20

Had a had a lady that loved kids and she was uh her late fifties, if I remember correctly, and just started keeping kids in her home. Yeah. Three or four kids. Um and and the parents loved it because they knew her. Uh the kids weren't in some institutional, that's probably the wrong word, or child care or commercial child care, child care place or whatever. Um they knew they were being taken care of. And the price was better, the whole bit. So she made some money and and parents were happy, kind of thing. Again, I keep throwing out these ideas. I probably shouldn't keep doing that, but I just have these stories that keep popping up in my mind, what people are doing.

Mindset Support And Using Severance Wisely

SPEAKER_00 20:56

And I think mindset too is one, you know, once you get past the initial shock, savor the downtime for a little while as well. I mean, I know it can be a little stressful, but one I would say take advantage on, uh take advantage of the opportunity to maybe reset and rest a little bit, take advantage of that. But then also alluding to what you mentioned before as well, don't navigate a late career layoff alone. Leaning on friends and family for encouragement, um for perspective, that's not weakness, that's wisdom, right? So you may also find more people have been through something similar than you would expect. And then also if you have networks that you've, especially late career, you probably have a ton of networks to reach out to for new positions. I mean, it's always daunting to have to re-oh, time to set up the resume. And you know, we've heard so much about how frustrating it is applying these days, especially with so much AI being used up to the 100 million needed on haystack applications. Connect to the people you know in the industries and and see what positions are open if that's the path you want to go. Um also keep in mind if you have savings or a severance package, use that breathing room deliberately. Put that as part of your plan so you know how what you're covering.

SPEAKER_01 22:03

I was gonna mention that if you do get a severance package, I'm not saying go to Europe, okay? We don't need to be spending 12,000 bucks. But go fishing. You know? Uh go hunting, go uh hang out with your friends, go, you know, uh take the family, maybe on a short weekend trip or whatever, because you may not get another vacation for a while if you start a new position.

SPEAKER_00 22:19

Yeah.

SPEAKER_01 22:20

Uh could be a year or two away. So again, I'm not saying go out and spend money, be careful with that. But there's a lot of things you can do to go out and relax and and um you know, and without spending uh an arm and a leg, so to speak.

SPEAKER_00 22:31

Well, some of the best retirement decisions come out of that quiet stretch where people finally have space to to think and to ask what do they actually want next. I've I've I'm not retired yet, um, never done that before. However, there have been times uh I can think of one really big one um where I was on vacation um f from a time where life was just crazy and busy and I didn't know I felt like I was kind of stuck in limbo, didn't know where I was going with career and and goals and life and stuff. And vacation was just enough time uh reset away that it kind of reset my perspective and I had an aha moment and it really reshaped the rest of my life from that point, like a my sense of direction of what I wanted to pursue from that point on. So, you know, when I say your mindset, take advantage of the time off, um it is hard to get past the being let go from a position. Um once that shock, you know, be easy on yourself as well, but once that shock is over, really do take some deliberate downtime to to rest up, to focus on your personal, emotional, mental health, and who knows what you might actually what might actually come out of that, what kind of direction you'll be sent.

SPEAKER_01 23:42

And if you have a spouse, again, share with them your fears and thoughts and um what they think because they see you in a different way. They say, well, you've always enjoyed this or you've always done that, or whatever. Just again, that encouragement that can be there as well. So um just a lot of things to think

How To Get Help And Closing

SPEAKER_01 24:00

about. I do encourage folks, if this is even something on the horizon, like you've gotten a little bit of scuttle butt that and there could be something going on here. I mean, go ahead and talk, reach out to us. We are uh a caring listening ear. We are here to help help financially. We have a lot of ideas as well.

SPEAKER_00 24:16

Yeah, absolutely. Masterplanretire.com.

SPEAKER_01 24:20

Plan well and prosper. That's right. Join us again next time, okay? Thanks.