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Most people often dream of a retired life where they would not have to get up to an early morning alarm, jostle for space in heavily overcrowded trains, or work for long hours to please their boss in order to get a raise in salary. They wish to travel in their spare time and meet relatives whom they have not met for a long time. Many of them would have married off their children and would now love to spend time with their grandchildren.
With technological advancements taking place at such a fast pace life has not remained so simple and easy. There is cut-throat competition with the earning skills becoming redundant in a short period of time. The earlier dreams of people getting retired at 60 years of age are not possible for everyone. Many of them would have to take forced retirement earlier or would be forced into early retirement much before 60 years of age.
So what are the reasons that can land an individual into forced early retirement?
- Health-
Due to the ongoing projects, people are forced into working for long hours. They rush to the office, get up early in the morning, don’t have meals on time, and often work late into the night. There is too much work-related stress and people often neglect their health for years altogether. The result is that as they get a little older they find it difficult to continue working due to ill health. It may also be that a sudden illness may arise which may force them into early retirement or they may have to reduce the number of hours that they work. This could be due to heart disease, cancer, or muscular and skeletal disorders. The working hours get reduced and people have to spend more on healthcare costs.
- Layoff-
When your company struggles financially it may decide to reduce the workforce. Otherwise too the workplace is becoming super competitive and a person can be removed from a job if their skills don’t match the requirements, become obsolete or there is a technological disruption. The older workers have higher salaries and in order to cut costs they may be laid off before the younger workforce. With age not on their side, older workers find it much more difficult to find jobs. So retiring early may be the only option left.
- Job dissatisfaction-
You will not be able to stick to your job till retirement if you are dissatisfied with what you are doing. There are numerous reasons for the dissatisfaction of an employee with the job and this may be due to; having an untrustworthy boss, being underpaid, limited career growth in the organization, lack of work-life balance, toxic workplace, denial of empowerment, remaining unappreciated and the work isn’t meaningful. There may be a combination of these factors. A person may be forced to take early retirement in order to be mentally at peace.
- Caring for family-
Our family is our support in times of need and similarly, we have to support our family when they need us. A person may have parents who are too old and may require help, maybe even round-the-clock. Our spouse or the kids could develop health issues and we may have to care for them. It may make sense for some people to leave the workforce and take care of the ailing family member than hire full-time help.
The reasons discussed above may not necessarily be under our control. So it is always better to be well prepared if such circumstances arise. When you know that such a thing can happen, you will be prepared to handle it in the best possible way. The things that you can do in case of forced early retirement are-
- Have an emergency fund-
Having an emergency fund will be of help if you are suddenly out of job. The fund should be able to help you last for a year; helping survive the job loss and carry on with the family responsibilities. If you are in an industry where it is difficult to get a job easily then the fund should be able to last for a longer time and if you don’t think you will ever get a job again then you should have other options ready.
- Save more from an early age-
If you start saving from the time you start earning you would be able to build a sizable corpus. Let’s say you start working at 25 years and the retirement age is 60 years and the life expectancy is 80 years. So you will work for 35 years till retirement and for the next 20 years, you have to survive on your savings. In another case, if you start working at 25 years and are forced into early retirement at 50 years then you would have worked for 25 years and will have to survive on your savings for 30 years till the time you are alive. So it is imperative that you start saving from the time you start earning and saving, invest and build a large corpus to help you survive. The corpus should be able to beat inflation and give good returns.
- Review your investments-
A person should check the various schemes from where funds would be available. Individuals can voluntarily exit from the National pension scheme after 10 years if they are salaried and after 5 years if they are self-employed individuals and consultants. If you have invested from a very young age in stocks and mutual funds you will have created a good amount of money to help you survive.
- How long would the money last-
After listing all your savings and investments you will be aware of how much funds you will have for your lifetime. Now you will need to make adjustments to your lifestyle accordingly. Check for the monthly budget and the expenses you are making on housing, healthcare, food, transportation, entertainment, etc. Allow for your estimated life expectancy and you would get a rough idea of how long the money is going to last. If you are likely to fall short, think of means to supplement the shortfall of money.
Write down a detailed plan from where the money is going to come (Retirement account, investments, pension, annuity, etc.) and what additional money streams you can create to earn money. The taxations aspects have also to be taken into account while working out your retirement plan.
- Take help from a financial advisor-
If you think you are a DIY investor and can manage everything then it is fine but in case you think you can’t pull it off then it is wise to meet a financial advisor who is experienced in this field and would be able to help you out. You should be comfortable with the financial advisor who is likely to add value to your plan and achieve your retirement goals.
- Try methods to generate additional income-
Once you have calculated that the money you have is not sufficient to last for your whole life then you can work on methods to generate some additional income. You can work according to your skills. There are a number of sites that provide freelance jobs. You can choose to become a teacher, write a blog, start a YouTube channel, become a tourist guide, sell on e-commerce websites, be involved in the direct selling of products for companies, affiliate marketing, and baking and there are endless opportunities available in this world.
- Find a purpose to live-
You have been laid off and after calculation find that you have enough money to survive for the remaining part of your life. Sitting at home and not doing anything else would be boring and a waste of the remaining life. Make a schedule of your engagement with the outside world and try to contribute to the community you are living in. Otherwise just sitting at home would turn out to be harmful to your physical as well as mental health.
Forced early retirement would make any person gloomy about their future but if you are prepared from a young age then forced early retirement would not have much of an impact. If you have saved enough money, you would be able to live life on your own terms and indulge in a passion that you have always dreamt of. This would keep you engaged for the remaining part of your life. You will not have any regrets about life not being fair and would be able to turn the disadvantage into a situation where you can live life on your own terms.