Investing Retirement Planning 4 Steps to Take If You Are Forced Into Early Retirement By Wes Moss Wes Moss Twitter Wes Moss, CFP, is the chief investment strategist at Capital Investment Advisors and has been named one of America's top 1,200 financial advisors by Barron's every year since 2014. He hosts "Money Matters," a popular call-in radio show in Atlanta, and has served as a financial expert for CNN, CNBC, and Fox Business. learn about our editorial policies Updated on June 16, 2022 Reviewed by David Kindness Reviewed by David Kindness David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes. learn about our financial review board Fact checked by Emily Ernsberger Fact checked by Emily Ernsberger Twitter Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases. She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information. learn about our editorial policies In This Article View All In This Article 1. Review Your Benefits 2. Review Your Investments 3. Consider Your Pension Payments 4. Estimate How Long Your Money Will Last Photo: Ronnie Kaufman/Getty Images Every year, many retirees are forced into early retirement. In fact, according to a data analysis conducted by ProPublica and the Urban Institute, 56% of workers older than age 50 have been fired or pushed out of a job at least once. Other workers retire early because they're no longer healthy enough to work or they need to take care of an ailing family member. No matter what circumstances lead you to retire earlier than planned, you may need to rethink your financial plan for both the short and long term. Your original plans may have to be totally reworked, and you may find that things you had accounted for are no longer needed. Regardless, there are steps you can take to move from the defensive to the offensive with your financial strategy. Key Takeaways One data analysis shows that 56% of workers older than age 50 have been fired or pushed out of a job at least once.Other workers are forced into early retirement because of health issues or caregiving requirements.If you’re forced to retire early, review your benefits, investments, and any pension payments.Look at all of your available income and estimate how long that money will last based on your expenses and budget. 1. Review Your Benefits While you probably didn’t anticipate needing them yet, you'll need to consider when and how to begin tapping any benefits that are available to you. That includes things like Social Security, options for health care, and your spouse’s benefits. If you're not able to claim Social Security yet because you haven't reached age 62 and you're waiting until age 65 to be eligible for Medicare, you may need to look into alternative options for health care. 2. Review Your Investments You’ll need to make some decisions about your 401(k), individual retirement accounts (IRAs), and other investments. It may be best to postpone withdrawing any money from these sources to preserve your retirement savings. Otherwise, you’ll need to start curbing your expenses to match your income from your investments. If some investments aren’t giving you the returns you expected, it may be best to sell them and save the money. Remember that selling investments can trigger a capital gains tax if you're selling at a profit. You should also think about the order in which you should withdraw from your investment accounts. From a tax perspective, it typically makes more sense to withdraw from taxable accounts first to allow your 401(k) or IRA to continue growing tax-deferred. 3. Consider Your Pension Payments If you have a pension, you need to consider whether to take it as a lump sum or receive it in monthly installments. Both of these options could work well, but it depends on your situation. If you are an experienced investor or are working with a financial advisor, you might find that a lump sum is beneficial so you can build on it with the right assets. If you want to rely on it as part of your monthly income, taking it in installments may be best. Keep in mind that if your pension was funded even partially by you using before-tax dollars, your pension payments are partially taxable. This is important to keep in perspective as you manage withdrawals from various accounts to minimize your tax liability. 4. Estimate How Long Your Money Will Last Look at all of your available income and estimate how long that money will last based on your expenses and budget. You’ll see where you need to make adjustments and how they’ll affect your lifestyle. Focus on the larger expenses first, such as housing and health care. Then zero in on the other expenses in your budget, such as transportation, food, entertainment, personal care, and travel. Compare the total monthly cost of running your household to the amount you may be drawing from Social Security and from your retirement accounts. Then factor in your anticipated life expectancy to get an idea of how long your money is likely to last, based on your estimated withdrawal rate. If you risk coming up short, you may need to review your spending or consider how you can generate additional income, either through full- or part-time work or by investing in an income-producing product like an annuity. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. ProPublica. "If You’re Over 50, Chances Are the Decision to Leave a Job Won’t be Yours." U.S. Department of Health & Human Services. "Who is Eligible for Medicare?" Social Security Administration. "Social Security Entitlement Requirements." Department of Labor. "Taking the Mystery Out of Retirement Planning," Page 39. Pension Benefit Guaranty Corporation. "Annuity or Lump Sum." Department of Labor. "Taking the Mystery Out of Retirement Planning," Pages 18-19. Department of Labor. "Taking the Mystery Out of Retirement Planning," Page 33-35.