Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research determine where and how companies may appear. Learn more about how we make money.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

By Ingrid Case
May 25, 2020
Rangely Garcia / Money

The coronavirus pandemic has thrown many older workers’ plans into disarray, as they lose their jobs before they’d planned to retire.

April saw the highest monthly job loss on record: 20.5 million jobs. Overall unemployment jumped to 14.7%, the highest since the Great Depression. For people age 55 and older, unemployment surged from 3.3% in March to 13.6% in April, according to the AARP Public Policy Institute.

Ads by Ad Practitioners
Find emergency relief with the help of a Personal Loan.
With the extra aid from a Personal Loan, you can get out of debt and settle unpaid bills. Check if you qualify today by clicking on your state.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Get Started
ADVERTISEMENT

“The pandemic is a shocking blow to virtually all workers,” says Susan Weinstock, vice president, financial resilience at AARP. “But a third of the workforce is over age 50, and unemployment has hit them especially hard.”

If you’re in that boat, you’ve got a lot of company. Here are steps you can take to help your finances stay on an even keel.

Apply for unemployment

As part of the $2.2 trillion federal CARES act designed to offer economic relief during the pandemic, people who are out of work get their state’s unemployment benefit — roughly half your regular income, typically — plus $600 a week. That extra money will be paid through July 31 and is retroactive to as far back as March 29, for those who had already lost their jobs by that point.

Self-employed, contract, gig, and freelance workers aren’t usually eligible for unemployment. Between March 29 and the end of the year, however, these workers can receive the same unemployment benefits as people who have lost full-time, salaried employment. Everyone, contract or not, is eligible for an extra 13 weeks of state unemployment benefits — for a total of 39 weeks, up from the usual 26.

You can get unemployment benefits if you’ve lost your job entirely or in certain circumstances if you’ve lost hours or income because of the COVID-19 pandemic.

Ads by Ad Practitioners
Need extra cash? Start filling out surveys today.
With the help of Swagbucks, an online survey company, you can get your side hustle started in no time. Click below for more information.
Get Started
ADVERTISEMENT

Cut your expenses

Some of your budget items — meals in restaurants, a gym membership, theater tickets — have been eliminated for you. Others require discernment. You’re the best judge of whether take-out meals, alcohol, online streaming services, or other extras are essential or expendable.

With many of your smaller expenses on hold, review your biggest purchases. Cancel any big trips you may have planned for later this year.

The average cost of car insurance in the U.S. is $1,758 a year, or just under $150 a month. If you’re not driving one or more of your household’s cars, reduce or consider eliminating the insurance coverage on that vehicle.

If you’re having trouble affording your utilities, rent, or mortgage payment, call your utilities company, landlord, or bank, and ask them to work with you. Many banks and landlords are willing to make arrangements for clients and tenants to pay over time. Even if they’re not willing, many states have emergency eviction bans or have temporarily closed courts to all but the most important business during the pandemic.

Ads by Ad Practitioners
Make every dollar count with Recoup!
Unnecessary expenses and old subscriptions take money out of your account every month. Put a stop to that with Recoup. Click below now to find out more.
Start Saving
ADVERTISEMENT

Expand your job search

In addition to looking for a job like the one you lost, think about other work you might enjoy. “Get a part-time job or a side gig,” suggests Jarrod Winkcompleck, a financial planner in Austin, Texas. “People feel like needing a part time job means they weren’t fully prepared for retirement. There’s nothing to be ashamed of. Most people aren’t fully ready for retirement at 62.”

Tap your investments

Even with lower expenses and new sources of income, you may still have a gap between your bills and your resources. This can be a good time to take money from long-term investments in a taxable brokerage account, if you have one. As long as your income is no more than $40,000 this year — or $80,000 for a married couple — you’ll owe no capital gains tax. “You could also sell a loss to offset a gain and zero out your taxes for the portion of your income over $80,000, or pay capital gains taxes, which are still less than earned income tax rates,” Winkcompleck says.

This is also a good time to consider taking money from your pre-tax retirement accounts. The CARES legislation lets anyone who is affected by the coronavirus withdraw up to $100,000 from retirement accounts, without the usual 10% early withdrawal penalty that you’d have to pay if you’re under age 59½ . You’ll still owe income taxes on money taken from tax-deferred accounts, but you can spread it evenly over tax years 2020, 2021, and 2022. Replace the amount you withdrew within three years, and you can claim a refund on whatever taxes you paid. If you follow these steps, you’re in effect taking an interest-free loan from your traditional 401(k) or IRA.

Even if you can’t repay the money, an early withdrawal might make sense from a tax perspective. “Most people are reluctant to take withdrawals from pre-tax retirement accounts, but if they find themselves unemployed and looking to delay Social Security, now may be the best time to begin withdrawals,” says Gregory Kurinec, a financial planner in Downers Grove, Ill. After all, you’re likely in a lower tax bracket now than you will be later. “Wait until age 72, when they’re forced to take distributions and will probably also be taking Social Security, then chances are they will pay higher income tax on the qualified money,” Kurinec says. “People should not be afraid to use their qualified assets earlier in retirement to try and get the best tax treatment possible.”

Ads by Ad Practitioners
Leave your economic planning and investment management to Online Financial Advisors.
With expertise and knowledge, Online Financial Advisors may help improve your economic situation. Get in touch with an advisor today by clicking below.
Get Started
ADVERTISEMENT

Consider a reverse mortgage

If you’ve owned your house for a long time, you probably have substantial equity in it. People who are 62 or older can tap that equity in the form of a reverse mortgage. Instead of you making monthly payments to the bank, the bank pays you: a lump sum, monthly payments, or a line of credit that you tap only when you need it. You pay off the loan when you move out of the house or die, though some people pay the loan off before then, says Denver financial planner Kristi Sullivan.

Closing costs and interest rates are typically higher than for standard home loans, Sullivan adds, and you’ll need to show enough income to pay for property tax, insurance, and home maintenance. What’s more, families often find themselves having to sell the home if the older adult needs to move to a care facility. It’s important to understand the potential drawbacks of taking out a reverse mortgage.

Ads by Ad Practitioners
Protect your retirement with a Reverse Mortgage.
With an additional income, you can cover health care expenses or even invest in things that will improve your quality of life. Find out more about Reverse Mortgages by clicking below.
Protect My Retirement
ADVERTISEMENT

Delay taking Social Security if you can

The proportion of Americans who take Social Security before reaching full retirement age is declining. About half of retirees filed for benefits at age 62 in 2005; by 2018, that was down to about a third. There’s a good reason to wait: your payment will be about 7.5% less for every year you get early payments, and about 8% more for every year you wait past full retirement age, up to age 70.

File at 62, and you’ll get between a quarter and a third less in monthly payments than you would if you waited until full retirement age, which is typically age 66 or 67, depending on your birth year. Hold out past your full retirement age, and your monthly check gets fatter, all the way up to a bonus of between a quarter and a third more if you wait until age 70 to claim benefits.

“Covid-19 is temporary, but your Social Security decisions are mostly permanent, and you’ll live with them for the rest of your life,” says Charles Sachs, a financial planner in Miami, Fl. “For the most part, people live long lives. Lock in the highest payment you can.”

There are a couple of single-use exceptions to that permanency. You can withdraw your application for Social Security benefits within twelve months of filing. Pay back whatever you’ve received, and the clock is reset. It’s as though you’ve never filed.

You can also take Social Security benefits early and suspend those benefits when you find another job. Your ultimate benefit check will reflect the age you’ve reached when you take benefits again, minus the time you spent taking early payments.

Pausing benefits will allow you to take advantage of other strategies to stay afloat financially, while you’re relatively young. “It will be harder to have a part-time job when you’re 85,” Sachs says.

More from Money:

Yes, You Can Still Claim Unemployment While Working Part-Time. Here’s What You Need to Know

How to Tell if a Job Offer is Secure in an Unstable Labor Market

Best Balance Transfer Credit Cards of 2020

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

EDIT POST