At a glance

  • Stay calm and focus on what you can control.
  • Make sure you have health coverage.
  • Figure out if you’re financially ready to retire, and if you are, whether it’s really what you want.

Whether you had a written retirement plan or not, you probably drew a mental picture of how your retirement would look—and had a general idea when it would begin.

But plans don’t always go according to . . . well, plan. You’re not alone if you find yourself unexpectedly retired. In fact, over 50% of retirees exit the workforce earlier than expected because of unforeseen circumstances: layoffs, buyouts, or a health issue that strikes them or a loved one.*

While retirement may have been out of your control, here are a few tips to manage what you can control.

Step #1: Stay calm

You’ll likely be feeling a range of emotions that make it hard to think straight. You may be overwhelmed by worry and stress—and more.

Chuck Riley
Chuck Riley

“I had a client who was suddenly let go from his new job 6 months after moving his family across the country and buying a new house,” said Chuck Riley, a senior financial planner in Vanguard Personal Advisor Services®. “It was quite a shock. He was angry. He felt betrayed.”

Your emotions will take time to process—and that’s okay. While you work through them, don’t take any actions in the heat of the moment that you might regret later.

Do you have a cash reserve that can tide you over for a few months and provide separation from those initial emotions? If not, and you feel like you must “do something” to regain control, focus on cutting your spending wherever quickly and easily possible.

Step #2: Focus on health coverage

If your health coverage remains unaffected—for example, maybe you’re covered through a spouse’s plan or you’re enrolled in Medicare—you can skip this step. But if your health insurance ended with your employment, insurance coverage is likely your most pressing need.

If you’re age 65 or older but haven’t signed up for Medicare, you’ll need to get on it right away. You technically have 8 months from the date your coverage ended to sign up without penalty, but going without health insurance is rarely a good idea.

If you’re not age 65 yet but you’re married or in a domestic partnership, your best option may be to obtain coverage through your partner’s health plan. You generally have 30 days to make this happen outside open enrollment season.

If Medicare and a spouse’s plan aren’t options, you’ll need to buy your own insurance. Some options you may want to evaluate include:

  • Insurance through COBRA (Consolidated Omnibus Budget Reconciliation Act). This federal law allows you to stay on your employer’s health care plan for up to 18 months. It can be expensive, but you’ll have the same coverage you had while working.
  • High-deductible health plan (HDHP). This might be a better option if you’re in excellent health—HDHPs generally only cover “catastrophic” health care needs.
  • Plan purchased through your state insurance exchange. Compare the prices with COBRA premiums. Under the Affordable Care Act (ACA), you may be eligible for a subsidy.

If you do need to enroll in an individual plan and it’s outside the open enrollment period, you have 60 days from the day you lose your former coverage.

More information
See your Medicare options and enroll at
Learn more about coverage under the ACA and see your options at

Step #3: Take stock of your financial situation

Once you take care of your health insurance, you’ll need to figure out how much money you have available to spend for the rest of your life—and whether it’s enough.

Bonus tip

A friend, family member, or financial advisor can act as a neutral party to help you clearly assess your situation.

What do you have?

First, consider any benefits you’re due. Depending on the reason for your sudden retirement, you may be eligible for disability payments or unemployment insurance.

“If you’re at least age 62, you’re probably eligible for Social Security, but consider that option carefully,” Riley said. “If you’re definitely not going to continue working and you have no other income, starting your benefits may make sense. But beginning before your full retirement age will lock you into a lower level of payments for the rest of your life. And if you end up returning to work, your benefits will be reduced until you do reach full retirement age.”

For now, simply find out what your benefit amount will be if you need it. Use the Retirement Estimator tool on the Social Security Administration website. Remember to consider what your benefit might be if you took benefits on your spouse’s record.

You’ll also want to consider any other income sources you might have, like an annuity, a rental property, or pension payments from a previous job. (And don’t forget your spouse’s income, if applicable.) Find out when any annuity or pension payments start and how much you’ll receive.

If you’re at least age 59½, you’ll also have full access to your retirement savings—money in 401(k)s, 403(b)s, and IRAs. But again, don’t touch it yet. Your retirement might last longer than you planned, and the longer you leave that money alone to grow, the better.

What do you need?

The other half of the equation is, of course, the money you’re actually spending.

“Many retirement calculators use a general guideline to estimate how much you need to save for retirement—assuming, for example, you’ll spend 80% of your preretirement spending,” explained Riley. “But that’s only a rule of thumb. Depending on your situation, you might not need that much.”

Here are a few factors to consider:

  • Now that you’re not going to a job every day, will you spend less on transportation? Clothing? Eating out?
  • Can you downsize your home? Move to an area with a lower cost of living?
  • Are there services you’d previously paid for that you can now do yourself? Housecleaning, dog walking, landscaping, and home and car maintenance might be expenses you can cut.
  • What other discretionary expenses could you give up if you had to?

Once you know how much money you have and how much money you need, you’ll be able to assess whether your financial situation is dire, iffy, or perfectly fine.

If you’re under age 59½

You might still have options for using your retirement money without penalty if you need to.

  • If you own a Roth IRA, you can withdraw your contributions any time without paying penalties or taxes. (This only applies to contributions—you’ll still owe taxes and penalties on any earnings if you withdraw them before age 59½.)
  • If you only have traditional retirement accounts, you can access the money through substantially equal periodic payments (SEPPs), a method of withdrawing money that exempts you from early withdrawal penalties. Note that once you start SEPPs, you’ll have to keep taking withdrawals until age 59½ or for 5 years, whichever is longer.

More information
See how an advisor can help
Learn more about claiming Social Security
Figure out how much you spend with our retirement expenses worksheet
See if you’ll have enough with our nest egg calculator
Estimate your Social Security benefits with the Retirement Estimator
Learn more about SEPPs at

Step #4: Decide how to move forward

In the best-case scenario, your resources will exceed your expenses and you won’t have to worry about working again. That’s what happened to Riley’s client. “He and his wife had done a great job saving, and they were in a solid financial position. I was able to show him that they actually could retire if they wanted to.”

In the end, Riley’s client discovered he still wanted to work, and he found a new position. You may want to consider that too. There’s a lot to be said for staying busy and continuing to save for the day you decide to retire.

In an alternative—maybe more likely—scenario, you won’t have enough money to live the retirement you envisioned. In that case, you’ll have to make some choices.

“Assuming you’re healthy, can you go back to work, even part-time?” Riley asked. “Don’t rule out unconventional options, like working as a freelancer or consultant, teaching at a local community college, or finding occasional gigs through a service like Uber.”

And if working isn’t possible? “From a financial perspective, sure, it’s better to keep a steady income stream if you can,” he continued. “But if that’s not an option or you still need more income, see whether you can get by with just Social Security for now. Let your retirement money keep growing.”

Need a second opinion?

“Forced retirement can stir your emotions—and emotions are often the enemy of good decisions,” Riley said. “But it’s important to make the best choices. An outside perspective can help you see things more clearly, and that’s why we’re here.”

More information
Check out Vanguard Personal Advisor Services

*Transamerica, 2016.


All investing is subject to risk, including the possible loss of the money you invest.

We recommend that you consult a tax or financial advisor about your individual situation.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.