How to Survive an Unexpected Early Retirement

Tom Sightings

Many people think that working longer is the simple answer to bridging the gap between insufficient savings and the financial needs of retirement. According to a 2016 survey by the Employment Benefit Research Institute, the proportion of workers age 25 and over who plan on keeping their jobs past 65 has increased from 11 percent in 1991 to 37 percent in 2016. Another quarter of workers expect that they won't retire until age 70 or beyond.

[Read: How Working an Extra Year Improves Your Retirement Finances.]

But these expectations may be wishful thinking. Another study from the University of Michigan found that 37 percent of respondents failed to reach the retirement age they had set when they were in their mid-50s. They were forced to retire early for a variety of reasons, such as a health issue, a layoff or pressure from family or friends.

So what do you do if you planned to work until 68 or 70, then you suddenly find yourself unemployed at age 58 or 60? Here are some suggestions.

1. Be prepared. You have to realize that, yes, it can happen to you. So, the sooner you start taking retirement seriously, the better off you will be. Even if you have a pension, open up an IRA and sign up for your company's 401(k) plan, salt away extra savings if possible. Buy a house, rather than renting all your life. Real estate appreciates over time, and rent money is gone forever. Take care of yourself by eating right, exercising regularly and getting your checkups, because the number one reason for forced retirement is a health issue. And while you're at it, take care of your skill set. You may not always have your old job, so update your skills, learn new ones and keep networking, so if you do get laid off, you have people to call and places to go.

2. Look for a new job. It's no fun job hunting after age 50, especially if you're interviewing with someone younger than your own children. But don't get depressed; deal with it. Remember, you have valuable assets, such as experience, contacts and maturity. But it's a new gig economy, and you're competing with people who are younger, faster and more technologically savvy. So swallow your pride. You may have to take a new job with less pay. I know more than one person who was laid off, then hired back by their old company -- to do the same job for less money. But sometimes the new arrangement also comes with more work flexibility and no more commuting to an office.

[Read: 10 Jobs You're at Risk of Losing as You Age.]

3. Work for yourself. There are opportunities to make money if you can't get a traditional job. Consider freelancing in your old industry, perhaps even for your old company. Maybe you have skills that are transferable to a different field. Perhaps you can turn a hobby into a paying proposition. I know several people making decent money selling their wares on Amazon and Etsy, and others renting out rooms on Airbnb or HomeAway. One friend of mine, a lawyer, was a fitness buff. After the crash he got a part-time job at a health club. Now he's turned down several job offers to stay at the health club as a full-time employee.

4. Gather your resources. You can tap into your retirement funds without penalty at age 59 ½. You're eligible for Social Security at age 62. You may not get as much per month at age 62, compared to waiting for full retirement age, but some people can't wait. Think creatively about money. Do you have assets, such as a weekend home, a boat, a collection or an extra car, that you can sell? You not only get the money from the sale, but might also lower your ongoing expenses. Do you have an adult child still living at home? Maybe it's time to start charging rent. The point is to look around and seize the money-making opportunities that you didn't even consider before.

[See: The Best Cities for Retirement Jobs.]

5. Change your lifestyle. If your kids are in college, maybe they'll qualify for more financial aid if you're no longer working. You might not need your house in the suburbs with the high real estate taxes and good school system you no longer use. Cut out things you no longer need, whether it is the membership to a pool and tennis club you had for the kids or the expensive vacation that was never as much fun as you thought it was going to be anyway. You're not diminishing your lifestyle, but adjusting to a new reality. A less lucrative but perhaps less stressful lifestyle will help prepare you for full retirement in a few years.

Tom Sightings is the author of "You Only Retire Once" and blogs at Sightings at 60.