The Challenges of Finding Work After 50

Eric Schauer’s life was going great until last July when he lost his senior manager job in Albany, NY, at the age of 55. Despite receiving a generous severance package from his former company in the chemicals industry, Eric’s job search for a new position has been unfruitful. He’s been a finalist for several positions but hasn’t received a job offer. Schauer believes that his age is a major factor in his difficulty finding work. Unfortunately, his case is not uncommon. Researchers Beth Truesdale, Lisa Berkman, and Alexandra Mitukiewicz analyzed data from the Health and Retirement Study and found that only half of Americans work continuously throughout their 50s.

Many factors contribute to this reality, including layoffs, health concerns, and caregiving responsibilities. These cross-generational issues affect lower-income workers the most. As a result, the financial consequences can be dire. In theory, the Internal Revenue Service allows workers over 50 to make extra contributions to their retirement accounts, assuming they can afford to do so. However, for job seekers like Eric who are out of work, it’s impossible to save. Many are forced to dip into their retirement savings to pay for living expenses.

Preparing for a Bumpier Decade in Your 50s

If you are in your 50s and not continuously employed, the chances of you working beyond that are slim. Only 35% of individuals who were intermittently employed worked beyond their 50s. In contrast, 80% of those who worked continuously continued to work into their next decade of life, reveals Overtime.

The Reality of Retirement

In the popular imagination, retirement is a linear progression. You work up until you decide to retire. But for many, the reality is less straightforward.

Taking Action

While it isn’t up to individuals to combat ageism and job scarcity for older workers, there are still some steps that can be taken to prepare for a potentially bumpy decade. Here’s what you need to do:

Start Saving Now

Workers over 50 can make “catch-up contributions” to their retirement accounts. These contributions allow individuals to contribute an extra $7,500 to their 401(k) and similar plans, and an additional $1,000 to individual retirement accounts. However, only 16% of eligible workers contributed in 2022, according to Vanguard’s How America Saves 2023 report.

Ideally, workers would have already been contributing to their retirement accounts consistently, reducing the need for catch-up contributions in their 50s. “I think of catch-up contributions as panic contributions,” says Teresa Ghilarducci, Professor of Economics at The New School. “That’s what Congress should have called them.”

Why Starting Retirement Contributions Early Is Key

The significance of initiating retirement contributions early is generally linked to compound interest. According to an illustration by MassMutual, if you begin contributing $475 a month to a retirement account at age 22, you’ll have $2.4 million by age 67, versus just $1.1 million if you start contributing at the age of 32, and only $450,040 if you wait an additional 10 years until 42, assuming annualized 8% returns.

Beyond the power of compound interest, it’s also essential to consider contributing early as a form of risk management. Waiting till your 50s to start saving up may not be feasible, so it’s best not to wait. Start saving what you can now, even if it’s only enough to match your company’s contribution. Additionally, consider catch-up contributions as a means of building up savings and make the most of them after years of steady contributions.

Stalling Retirement Progress

Mark Schauer’s unemployment hasn’t been financially ruinous for him; however, his retirement progress has come to a standstill. Although he and his wife do not have any children, his better half’s job in project management has kept them above water. But Mark is no longer contributing to his 401(k), and his wife is contributing only a minimal amount, “We’re kind of stagnating on retirement,” he says.

Lower Your Expenses

Rand Spero, president of Street Smart Financial in Lexington, Massachusets, frequently discusses job security with his clients and how they would pay their bills if they were unemployed. “I get a range of responses, from ‘I could get ten jobs tomorrow’ to ‘That’s pretty scary,'” he says. How to Prepare for Job Loss as You Approach Retirement

As you get closer to retirement age, the possibility of job loss can be especially daunting. However, there are steps you can take to prepare for this scenario and protect your finances.

Build Your Emergency Fund

Financial advisor Mike Spero recommends keeping at least six months’ worth of expenses in a liquid emergency fund. If you believe it may take longer to find a new job, consider saving even more. Homeowners who qualify for a home equity line of credit may also want to open one while still employed, allowing it to function as an emergency fund if they lose their jobs down the line.

Cut back on Discretionary Spending

If you’re concerned about job security, financial planner Hugh Taylor suggests assessing your spending to determine which expenses are fixed or discretionary. While it may be tough to give up certain luxuries, scaling back on non-essential expenses, like vacations or a new car, can help you build a buffer to weather future financial storms.

Learn from Others

As someone who has successfully navigated the transition from traditional employment to freelancing, Taylor advises taking cues from peers who have not been so fortunate. Be mindful of the mistakes they have made, such as failing to adapt to change quickly enough.

By taking these steps, you can be better prepared for the possibility of job loss while on the road to retirement.

Overcoming Challenges of Finding a Job After 50

Getting laid off can be a traumatic experience, especially when you’re in your 50s. Many individuals tend to replicate their prior positions and salaries in their new career, which sounds reasonable, but it may limit opportunities. The assumption that moving from one Fortune 500 company to another is easy is misleading; the transition may prove to be challenging.

According to David Wiczer, associate advisor at the Federal Reserve Bank of Atlanta and research fellow at the IZA Institute of Labor Economics, people over 50, after experiencing unemployment, are often offered a lower salary than they used to receive. Workers aged 56 and over usually earn 25% less on average in their new position if they remain unemployed for at least a month. His advice is for you to take the lesser offer. Once employed, it is possible to maneuver your way into a better position.

Despite his job search struggles, Schauer remains optimistic. He has read widely and kept himself current on developments in his field. In interviews, he uses his emotional intelligence as an asset to impress potential employers. He understands that his salary expectations might be too high and maybe needs to be more flexible.

In conclusion, finding a job after 50 may seem like a daunting task, but it’s not impossible. It requires a positive mindset, continuous improvement, and flexibility in salary negotiation. Don’t let the initial salary offer limit you; take the job and work your way up. Remember, you still have something to contribute.

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