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Announcing your retirement a few months in advance is considered a courtesy to your company. Not only does this give your employer time to manage the transition and hire a replacement, but it also gives you plenty of time to sort out your personal finances.
But what if, shortly after you announce your retirement, your employer decides to show you the door before your official termination date?
Even if you’ve already announced your retirement, being suddenly fired after years of service can be a frustrating and upsetting experience. It’s also natural to wonder if your employer is breaking the law.
As surprising as it may sound, your employer is generally under no legal obligation to continue working after you announce your retirement plans.
An AARP analysis of data examined by the Urban Institute and ProPublica from the Health and Retirement Study (HRS) report found that 13% of older workers entered retirement unexpectedly, which researchers suggest is that workers were forced out of their jobs (1).
That’s because many states have employment laws. An employee can be fired at will for any reason and at any time without warning — no “just cause” required.
But you may have some legal recourse if you have evidence that your employer withheld your pension from “vesting” or fired you as a direct result of age-based discrimination. This would violate the Age Discrimination in Employment Act (ADEA) and the Employee Retirement Income Security Act (ERISA), and you could have a lawsuit on your hands.
Read more: Approaching retirement with no savings? Fear not, you are not alone. Here are 6 easy ways you can catch up (and fast).
If you are terminated before your official retirement date, you have a few options.
Your company may offer severance pay as a way to waive your right to file certain lawsuits against your former employer. Aim to negotiate the best possible severance package, including asking your employer to continue subsidizing your health coverage. Otherwise, you may be forced to take out private health insurance to cover the employment gap.
Another option is to apply for continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) (2). However, COBRA coverage only applies to group health plans with a minimum of 20 employees. Additionally, those who are eligible are required to pay the entire premium for their coverage up to 102% of the plan’s cost.
The main benefit here is the continuity of your healthcare plan, but depending on your financial situation, the price tag can be a big disadvantage.
To know where you stand, you may want to consider speaking with a financial advisor to understand how this will affect your retirement plans. And if you have the finances to support early retirement, a financial advisor can help you plan for your golden years.
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As you get closer to retirement, every dollar starts to matter more.
Between rising health care costs, financial uncertainty and life on a fixed income – making the most of your nest egg can feel like a challenge.
That’s where AARP—a trusted organization for many older Americans—comes in. You can get discounts on almost everything, from prescription and dental plans to travel, entertainment and insurance.
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By being proactive, you can hopefully ensure that your employer’s decision to force your early departure doesn’t derail your retirement goals.
“You may not have 40 years left, but you have today. And that’s enough to start turning the ship around,” noted financial guru Dave Ramsey told Kiplinger.com (2).
Creating a financial buffer can help you weather these challenging times without compromising your lifestyle or taking on more debt. When hedging your portfolio against inflation and recession risks, you may want to invest in safe-haven assets like gold, which provide stable returns over time.
One way to invest in gold that can also provide significant tax benefits is to open a gold IRA with the help of American Hartford Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account – combining the tax benefits of an IRA with the protective benefits of investing in gold, making it an option for those looking to potentially hedge their retirement funds against economic uncertainties.
Even better, you can roll most existing 401(k) or IRA accounts into a gold IRA for free with up to three years of free storage, maintenance and insurance. To learn more, get your free 2025 information guide on investing in precious metals.
Eligible buyers can also get up to $25,000 in free silver.
But make sure not to put all your eggs in one basket. If all your money is tied up in stocks or precious metals, an emergency expense could force withdrawals during a market downturn or push you into debt.
If you don’t have a steady source of income, financial experts like Ramsey recommend keeping at least 12 to 18 months of expenses in your emergency fund.
“Saving enough for retirement is important, an emergency fund ensures income stability no matter what happens – health issues, home repairs or market downturns,” according to 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 fully enjoy retirement.”
Keeping your emergency fund in a high-yield savings account can help ensure your money is accessible while earning interest.
For example, you can get 3.90% APY (base APY of 3.25% and a 0.65% boost in the first three months) on your emergency fund with a Wealthfront Cash account through program banks. That’s about 10 times the national deposit savings rate, according to the FDIC’s January report.
A Wealthfront cash account lets you pay bills, set up direct deposits and cash checks at high interest rates.
With no minimum balance or account fees, plus 24/7 withdrawals and free domestic wire transfers, you can ensure your funds are always accessible. In addition, Wealthfront cash account balances up to $8 million are insured by the FDIC through program banks.
We rely only on vetted sources and reliable third-party reporting. For details, see our Editorial ethics and guidelines.
AARP (1); Department of Labor (2); Kiplinger.com (3); GoBanking Rates (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
