Layoffs are blurring the retirement lines for seniors

For older people who wish to stay in the workforce, a layoff or buyout can radically change their financial picture.

According to a recent report from The Wall Street Journal, it takes an average of 26 weeks for people ages 55 to 64 to find a job — seven weeks longer than people ages 25 to 34.

Kevin Cahill, an economist at FTI consulting, told the Journal that those who get laid off later in their careers are less likely to move into a new field than those who quit. Ageism and higher compensation expectations make reemployment more difficult, he said, adding that older workers typically take an 11% pay cut when they find new jobs.

The Journal profiled four seniors whose financial situations have changed since a layoff or buyout. Those who retire might need to break into their savings early or forgo 401(k) or IRA contributions, although none of the profiled seniors were actively considering a reverse mortgage.

Kevin Crain, the former head of retirement research at Bank of America, took early retirement in 2023. He has transitioned to part-time paid work as a consultant and director of a retirement industry association that’s focused on 401(k) products and services. About half of his monthly expenses of $23,000 are for rent on his New York City apartment and the mortgage on his home in Gloucester, Massachusetts.

Drew Myers, a technology salesman, was laid off at 67 and struggled to get a new job, which he attributed to ageism. He and his wife moved from Connecticut to Florida, where they’re renting a three-bedroom home before committing to buying in The Villages.

Myers was able to care for his father for a year until his death from cancer. Myers and his wife plan to spend about $350,000 on a new home and will use the proceeds from the sale of his deceased father’s home.

Another senior, Brenda Pitts of Brooklyn, New York, doesn’t consider herself retired but might have to if she can’t find a new job.

A former financial services industry worker, Pitts said she’d consider a pay cut to work in government or for a nonprofit. She has $2.3 million saved but put retirement contributions on hold and is worried she might not hit her goal of $4 million. She spends about $5,175 per month on mortgage and maintenance fees.

In 2013, Cartier Snyder had a health scare and was expected to live for about five to 10 years. In 2019, he was offered a buyout from his longtime employer. Snyder and his wife Barbara have about $500,000 in retirement accounts and receive about $6,000 a month in Social Security. They also get another $1,900 a month in rental income from a duplex they own and live in. 

The Plano, Texas, couple spend roughly $9,000 a month. They have about $100,000 left on the mortgage balance for their duplex, with the biggest expenses being property taxes, home insurance and food.

He now spends time working out and taking care of grandchildren. “You need to find your new purpose once you leave your job,” he said.