What to consider if you’re forced to retire early

When it comes to retiring, most of us imagine we will be the ones making the decision to leave the workforce. But that’s not always the case. Sometimes, unforeseen circumstances can force you into retirement.

Whether your employer is restructuring, your health has taken an unexpected turn, or a loved one needs your care, many people find themselves suddenly retired.

According to the latest Australian Bureau of Statistics (ABS) data, the average age Aussies plan to retire is around 65.5 years old. The actual average retirement age, however, is almost 10 years earlier, at 56.3 years.

Early, unplanned retirement can be an anxious time as you contemplate the financial implications of your new circumstances. So what are your financial options if you find yourself out of the workforce unexpectedly?

What to do if you’re forced to retire early

The first thing to remember if you’re forced to leave the workforce is not to panic. Or to make major decisions like selling your home or cashing in your super, as these actions can come with unforeseen costs like additional tax or making you ineligible for government assistance.

Provided you have money to support yourself for a couple of months, stay calm and check out all your options before acting. There are many options to explore, even if it’s a few years until you’re able to access your super savings or claim the Age Pension.

The key is to make a plan to help you stay on track financially and work out how to handle your future lifestyle expenses.

Work out your financial position

It’s important to understand your current financial situation now you’re retired. Knowing how much you have and how much you’ll need for essential expenses will give you more confidence about your future.

If you have been made redundant, there could be a payout from your unused annual leave and long service leave, although there may be some tax to pay. Tax and redundancy payments are detailed on the ATO’s website here.

Add up all your assets and potential sources of income such as your super, personal savings, assets like your car or furniture, and income from any investments such as a rental property, shares or bonds.