A multi-decade study by ProPublica and the Urban Institute found that over half (56%) of employees over 50 have been fired, forced to retire early, or otherwise pushed out of their jobs before they were ready to retire. Another 9% have been forced to resign for their own personal reasons, such as health or a family crisis.
And it doesn’t get any easier for older workers from there. A third of these pushed-out employees go on to be fired from two or more jobs before leaving the workforce. Most worrying of all, only 1 in 10 of them ever reaches their previous salary level again. That has a lifelong impact on these older adults’ financial futures.
And for all the talk over the last two decades about age discrimination, it’s getting worse, not better. In 1998, the percentage of older workers who had been pushed out of their jobs was less than a third, compared with 56% in 2016. The percentage of older adults who suffered major financial damage from being pushed out of a job tripled, from around 10% to nearly 30% in the same time period.
Improvements in automation are increasingly threatening job security in many industries. In fields where technology advances rapidly, it’s no surprise that employers let go of the highest-paid, least-technologically-proficient workers first. That’s all the more reason why older workers must not take their careers for granted.
So how do you protect yourself and your retirement against the growing odds of career derailment as an older adult? Here are three types of security to prioritize, and how to build upon each as an older worker.
1. Build Financial Security
If you reach financial independence – which is defined as having enough passive income from investments to cover your living expenses – then working becomes a choice. It’s a luxury, not a necessity.
Sure, everyone is working toward that goal in one way or another. We all have an idea in our minds of when we’d like to retire. We plan based on our current income and our intended retirement age.
But as an adult over 50, you don’t have nearly as much control over your income or retirement date as you might think. Which means you should reevaluate your financial security and get more aggressive about reaching financial independence sooner rather than later. Here’s how.
Maximize Your Retirement Investments
Start with maximizing your 401(k), IRA, or other tax-advantaged retirement accounts. As an adult over 50, you’re eligible for extra “catch-up” contributions: an extra $1,000 per year in your IRA, and an extra $6,000 per year in your 401(k) or similar plan. But don’t stop there. Remember, you can’t withdraw money from these retirement accounts without incurring IRS penalties until you’re at least 59 ½.
Do you have a target sum for your nest egg? If you aren’t crystal-clear on your financial goal for your investments, take a few minutes to learn how safe withdrawal rates work and calculate your target nest egg. Don’t be afraid to hire a financial advisor for an hour or two to help you set goals.
You should also have a taxable brokerage account in addition to your IRA or 401(k) to generate ongoing passive income streams. If you don’t currently have an aggressive savings rate, try starting from scratch by making a budget. You’d be surprised just many expenses you can slim down if you throw out your assumptions and look for creative ways to cut spending.
Make Your Expenses More Flexible
If you lost your job tomorrow, which of your expenses could you trim?
Some are easy, at least on paper: dinners out, entertainment, clothes, and other discretionary expenses. Be prepared to eliminate nearly all of these in a crisis to help your emergency fund last longer.
What about housing? Transportation? Credit card debt? Other loans? These aren’t so easy to cut quickly, so it’s worth preparing for cutting them in advance.
Start by paying off all high-interest debt, such as credit cards and personal loans. That’s sound financial advice no matter how old you are. Then, take a closer look at your housing and transportation costs. What would it take to get rid of a car? How could you reduce your housing costs?
One option is downsizing your home. When your children move out of the house, it’s a good time to downsize to save not only on your rent or mortgage, but also on utilities, maintenance, repairs, and the other costs of living in a larger home.
Another option is renting out a bedroom in your home. It doesn’t have to be long-term if you don’t like the idea of a housemate; you could rent out a room for a few nights at a time on Airbnb.
Even if you find yourself among the minority of older workers who never get pushed out, adding flexibility to your spending will help prepare you for sequence of returns risk. Losing your job isn’t the only threat to your finances as an older adult; upon retiring, you may find a sudden need to tighten up if the market crashes on you.
2. Build Job Security
No one has perfect job security, no matter how sunny the sky looks today. And older workers’ job security is even less assured than most. Still, you can take several steps to boost your job security and make yourself the last person your employer would consider letting go.
Reinforce Critical Relationships at Work
In any given job, there are five crucial people with whom you must be on excellent terms. Your direct supervisor is, of course, one of them, and their boss is another. The other three are the people you work with most, regardless of their seniority levels.
Joke with these people. Do favors for them. Occasionally ask them for favors yourself. Have lunch with them sometimes, or happy hour drinks, or dinners with your spouses, or all of the above. Know what’s going on in both their professional and personal lives, and offer sympathy or celebration when appropriate. Follow up on ongoing issues and offer to help.
None of this is rocket science; it’s what you should be doing anyway to increase your odds of promotion. But one of the reasons older adults find themselves first on the chopping block is because they often get comfortable and forget to invest the time and effort in maintaining these critical career relationships.
You can’t coast your way to retirement. After 50, maintaining these relationships isn’t just about advancing your career; it’s about keeping it.
Demonstrate Leadership Both Subjectively & Objectively
Showing leadership requires both the qualitative and quantitative, the subjective and the objective.
Subjectively, you’re off to a great start by reinforcing your relationships with the people you work with the most. Next, look for ways to take it a step further. Take initiative. Offer to take on additional responsibilities. Offer feedback and ideas at meetings. Be as visible as you possibly can.
Objectively, look for how you can tangibly demonstrate the results you produce. What are the key performance indicators (KPIs) for your job? For your department? If you aren’t clear on them, get clear on them by talking to your boss and your boss’s boss. Then find ways to expand upon and improve these numbers.
Note that subjective and objective actions mutually reinforce one another. As your KPIs improve, others will take your feedback and ideas more seriously. As others become more receptive to your ideas, they’ll be more likely to work with you and help you improve your KPIs.
Again, this advice is not unique to older workers, but it certainly helps them avoid being the first cut when a department gets downsized.
Stay Cutting-Edge in Your Field
Another reason why older adults can find themselves first on the chopping block is that they’ve lost touch with the technology and trends in their industries. It’s another symptom of getting comfortable and coasting toward retirement, which you can’t afford to do. New technology may not come quite as quickly to you as to a 23-year-old, but it’s time to get over that. It’s one of the many indignities of getting older, and it’s far from the worst.
Read articles or listen to podcasts about your industry every single day. Try new tactics, new technology, new tools as they come on the market. Ask your colleagues for their opinions about new developments.
By staying on top of the changes in your industry, you remain not only relevant, but also effective at your job. Subvert your colleagues’ expectations by staying cutting-edge, which helps you achieve better numbers on your KPIs and demonstrate leadership in your department. Lifelong learning is one habit of successful people that no one can dispute.
3. Build Career Security
Even if you do everything right to improve your job security, your company could go under tomorrow in a sudden scandal, or a buyout offer could make your job or department redundant.
But your job is not your career, and if you remain demonstrably relevant and effective at what you do, you can replace your job at any time. Remember that only 1 in 10 pushed-out older workers ever reaches the same salary. Here’s how to be the exception.
It’s a cliché, but there’s truth in it: Your network determines your net worth.
Your network is far larger than the small group of people you talk to every week or even every month. Distant relatives, neighbors, old friends you haven’t spoken to in years – these are all members of your network. Strategically go about reconnecting with a certain number of people every week, starting with the people closest aligned with your career.
As you reconnect with long-lost contacts and forge new ones, remember that networking is not about having a LinkedIn connection with someone. It’s about building relationships, getting to know people deeply enough that you care about them and they care about you – enough, in fact, to introduce you to new employers, clients, and opportunities.
Don’t fall into the habit of thinking in terms of what someone can do for you and your career. Ask not what your contacts can do for you; ask what you can do for your contacts.
Networking doesn’t come naturally to many people, so try these networking tips for introverts to make networking fun, comfortable, and easy at any age.
Prepare 3 Personal Pitches for a Moment’s Notice
As an update on the classic elevator pitch, come up with three different pitches: a five-second pitch for chance encounters with important people, a 30-second pitch for networking events, and a two-minute pitch for interviews. Each pitch should intrigue the listener enough to make them keep asking you for more about yourself and your work.
Imagine you bump into someone several tiers above you, and out of politeness, they ask, “How’s it going?” Cue your five-second pitch: “A lot better now that I wrapped up XYZ project. It was exhausting but rewarding.” If your pitch is well-crafted and well-delivered, it will make them pause, genuinely take notice of you, and engage you in a more meaningful conversation.
The same goes for your other, slightly longer pitches. People are busy, distracted, and they usually aren’t thinking about you even if they’re talking to you. Your pitches must break them out of their own thoughts and seize their attention.
Like so many other recommendations above, this works for all ages, but it’s especially important for workers over 50, who fight an uphill battle against stereotypes and assumptions. Make others notice you and engage with you so that you can demonstrate just how excellent you are.
While you’re at it, try these other job-hunting tips for workers over 50 to stay competitive and land high-paying jobs even at the tail end of your career.
Explore Side Gigs for Additional Income
Yes, side gigs can help you produce more income to funnel toward retirement and passive income-producing investments. But they also diversify your income so that if you lose your job, you won’t lose your only source of revenue.
You can start a business while working your full-time job and potentially grow it to become your full-time gig. Or you can freelance online, leveraging some of the best freelance websites to find clients and gigs.
Even if you never lose your full-time job, side gig income is a perfect way to transition into retirement. It helps you continue earning money even after retiring from your job, keeps you busy and engaged, and can help you avoid taking Social Security early – all on your own terms and your own schedule.
Today’s technology-centered economy is increasingly ambivalent toward older workers. Not because they can’t keep up with technology, but because some don’t, which fuels the stereotype of older workers resting on their laurels and ignoring rapid technological and industry changes.
You can’t coast into retirement. Chances are, you’ll be fired or pushed out of your job at least once after you turn 50, so it’s up to you to build financial security, job security, and career security in the final decade or two of your career.
This late stage in your career is critical to your retirement, so getting complacent and comfortable not only constitutes a career mistake but also a retirement planning mistake. Until you reach financial independence, you need active income to see you through to retirement, so take steps to protect it as you enter the dangerous later stages of your career.
How are you currently protecting your income, and what might you do differently moving forward?