My Wife Was Laid Off at Age 64: Here Are 5 Questions We're Asking
Even people who work in financial services have questions when an unexpected layoff happens right before retirement. Here are five issues that need to be addressed.
A few weeks ago, when I took a look at my retirement accounts, I felt good. My wife, Liz, and I were on target for our retirement strategy.
Our retirement plan has us both working for an additional three to five years or so. Working later has been part of our retirement strategy so we can support our children more now, rather than through an inheritance later on.
We want to cover medical school tuition for our son for another couple of years. We paid for vet school for our daughter and want to pay for her upcoming wedding.
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We're also renovating a beach cottage for our retirement home.
Even with these expenses, we were on track.
Recently, after almost 45 years at her company, Liz, at age 64, was told her position had been eliminated. Now, everything feels different.
This was not the plan
We don't know yet if Liz will retire or take on a new job. We aren't in trouble financially. We have always lived within our means and been diligent savers, and we have some of our IRAs invested in annuities with guaranteed income options.
This wasn't the plan, though, and we don't want to rush into any decisions. We're meeting with our financial professional soon to discuss our options.
I have talked for years about the risk of an early retirement as part of my job working with financial professionals. Yet, I hadn't seriously considered the possibility that our retirement wouldn't happen on our timeline, even though it is common.
It's common to leave the workforce earlier than you thought, especially for reasons outside of your control. About two in five (42%) of Americans retire earlier than expected, often for reasons outside of their control, according to the 2026 Annual Retirement Study from the Allianz Center for the Future of Retirement.
Unexpected job loss was the second-most-common reason to retire earlier than anticipated after health issues that prevent performing their job.
We all need to think about this
So, now I get it. We all need to seriously think about the risk of an early retirement.
Beyond the financial impact, an unexpected early retirement can take an emotion toll as well. It can have a psychological impact on both the individual and their family. Liz describes it as a grieving process.
As we make financial decisions, it's important to recognize these emotions and avoid making major financial moves based on them. This is where our financial professional will become an invaluable partner.
Here are the five areas that anyone nearing retirement should be thinking about now, not later, to understand the risk of early retirement.
1. Can you actually afford to stop working?
Considering if you can stop working is complicated. In our situation, we've gone from two incomes to one. Her severance gives us some breathing room. We need to evaluate if we can afford for her to not work again and still achieve our financial goals now and for retirement.
Starting over again late in your career can also be daunting. It's even more daunting for Liz, who worked for the same company for more than 40 years.
It often also takes longer for older workers to find a new job. On average, workers over age 65 spend 39 weeks unemployed, and workers between ages 55 and 64 are unemployed for 36.9 weeks, according to the U.S. Bureau of Labor Statistics.
Younger Americans are unemployed for shorter durations.
2. How will your savings change?
If we're living on one income and covering the same expenses, something has to give. And it may be our ability to keep saving — at the time when saving matters most.
Our plan assumed we'd keep contributing to our 401(k)s for a few more years. Many people do this since these are typically some of your highest-earning years.
I've been making catch-up contributions to boost our retirement savings while we still could. Now, I'm not sure we can keep doing that.
The closer you get to retirement, the more valuable those final contributions can be. Catch-up contributions are designed for this stage of life — to help you make up ground and take advantage of tax-advantaged growth when time is limited.
We're now asking:
- Do we keep prioritizing savings, or preserve cash flow?
- Do we reduce contributions to maintain flexibility?
- How does stopping now affect our long-term outlook?
When retirement happens earlier than expected, time can be a big constraint. You don't have as many years left to contribute or recover from changes.
3. When should you claim Social Security?
We hadn't planned to claim Social Security anytime soon. Like a lot of people, we assumed we had time to figure that out. Now, we don't.
I've reached my full retirement age, so I could claim my full benefit today, and it would not be reduced since I've reached full retirement age — but that would prevent me from receiving delayed retirement credits.
Liz could claim as well, but her benefit would be reduced if she starts before her full retirement age. If she starts Social Security and then does end up going back to work, she may have her benefit reduced if she earns over the maximum allowed while on Social Security before your full retirement age.
All of this leaves us weighing a real tradeoff: Should I file for benefits now or wait for higher benefits later?
Social Security is often the foundation of retirement income since it provides a guaranteed income stream that lasts for life and typically increases with cost-of-living adjustments.
But when you claim has a big impact on your retirement income strategy. Claiming early can reduce benefits by as much as 30%, while delaying can increase them by about 8% per year until age 70.
For couples, there's another layer. The survivor benefit is based on the higher earner's benefit. Claiming early could permanently reduce income for whoever lives longer.
This decision connects to everything else — how much we withdraw from retirement accounts, how we manage taxes and whether Liz goes back to work. The right decision for you depends on your savings, your health and your income needs.
4. Where will your health insurance come from?
The only thing more expensive than health insurance is not having health insurance.
When you lose your job, you often lose your health insurance. Liz is eligible for Medicare in a few months. That leaves a short, but potentially costly, period of time when she will need medical coverage.
Fortunately for us, since I am working, Liz can get health coverage through my employer.
There is no such thing as claiming Medicare early. So if we were younger, and I did not have health coverage through my employer, this could be a significant extra expense we would have to cover.
Health expenses will likely increase in retirement as you find yourself needing more healthcare services. Don't underestimate the potential cost of healthcare in retirement.
5. How will your tax strategy change?
Most of our retirement savings are in tax-deferred accounts. That has helped us lower our taxable income while working and let those investments grow tax-deferred. But now, those deferred taxes are coming due.
Every dollar we withdraw to fund our lifestyle counts as taxable income. We have after-tax investment accounts and small Roth IRAs, so we need to incorporate those into our strategy as well.
That means we're not just deciding how much to take out — we're deciding how much of it we'll actually get to keep.
You need to calculate how much to withdraw in order to fund your level of spending after taxes.
You also have to be deliberate about how and when you take money out. Those withdrawals can push us into a higher tax bracket, increase how much we pay for Medicare and affect how much of our Social Security is taxed.
We had planned on converting a portion of our IRAs into Roth IRAs over a period of time before our required minimum distributions (RMDs) begin. We are not sure we can still afford to do that — yet another question for our financial adviser.
Taxes don't go away in retirement — they just show up differently.
Liz and I are now personally experiencing the reality that retirement rarely unfolds exactly as planned. We know we are more fortunate than others, but part of it was due to planning, keeping a budget and trying to avoid extravagant expenses while still enjoying our lifestyle.
Flexibility is just as important as discipline when it comes to retirement planning. By thinking through the what-ifs now and seeking trusted guidance, we can make more confident decisions in moments of uncertainty.
Even for those of us who prepare carefully, timing can change overnight.
Allianz Center for the Future of Retirement® conducted the 2026 Annual Retirement Study in January 2026 with a nationally representative sample of 1,000 respondents age 25+ with an annual household income of $50K+/$75K+ (single/married) OR investable assets of $150K+.
The Allianz Center for the Future of Retirement® produces insights and research as a part of Allianz Life Insurance Company of North America.
Allianz Life Insurance Company of North America and Allianz Life Financial Services, LLC do not provide financial planning services.
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