What the pros do when jobs get shaky
Look, when unemployment starts creeping up and headlines get noisy, as they have in pockets of the market this year, seasoned folks don’t slam the retirement button. They widen the margin of safety first. It’s not flashy, but it works. Think: more cash on hand, slightly lower baseline spending, and tighter risk controls before making anything irreversible like filing for Social Security. If you’re Googling “should-i-delay-retirement-amid-rising-unemployment,” you’re asking the right question.
Here’s the thing: pros assume bad news travels in packs. A layoff doesn’t always show up alone; it loves to bring a market pullback to the party. So they stress-test both at the same time. They’ll run a scenario like, “What if I lose my job for 6-12 months while stocks drop 20% and bonds are flat?” That’s not paranoia, it’s a lesson from 2022 when a classic 60/40 portfolio fell roughly 16% for the year (S&P 500 down about 19%, Bloomberg US Agg near −13%). Sequence risk is real when you’re about to start withdrawals.
Pros also separate wants from needs, then fund the needs with reliable income first. Needs = mortgage/taxes/healthcare/groceries. Reliable income = Social Security, pensions, TIPS ladders, cash buckets, or a small SPIA. Wants, travel, upgrades, generosity, get funded from the market portfolio only after the base is locked. This sounds basic, and as I mentioned earlier, it is. But that’s why it works.
On Social Security, they keep options open. Filing at 62 can cut your monthly benefit by roughly 25-30% versus your full retirement age, while delaying beyond FRA adds about 8% per year up to age 70 (SSA rules). That’s a big swing. Pros delay claiming if possible, but keep enough liquidity so they don’t have to file out of panic. Honestly, I wasn’t sure about this either years ago…but the math keeps winning.
They also make choices reversible where they can: test-drive part-time work before fully retiring; stage retirement (drop to 60% hours, then 30%); use temporary spending “guardrails” (trim 5-10% for a year) to avoid tapping equities after a drop; rebalance tighter; hedge concentrated positions; and shore up 12-24 months of essential expenses in cash-like assets. If the storm passes sooner, great, plans can flex right back.
One more data point that matters when jobs wobble: EBRI’s 2024 Retirement Confidence Survey reported that roughly 4 in 10 retirees left work earlier than planned, often due to layoffs or health issues. Translation: involuntary retirement isn’t rare. That’s why the pros prepare to not just retire when they want, but to survive being pushed out when they don’t want to.
Practical rule-of-thumb: before you make an irrevocable move, be sure you could cover 18 months of “needs” without selling stocks in a slump, then decide. It’s a small speed bump that can save a portfolio.
So, in this section we’ll keep it simple and now-focused: how to build that margin of safety, stress-test the dual hit, line up durable income for essentials, and keep decisions as reversible as possible, because certainty is nice; flexibility pays the bills.
Runway math: can your plan survive a job market wobble?
So, here’s the thing: guesswork is what sinks retirement timing when unemployment creeps up. Start with a real budget, not vibes. Break it into three buckets and write actual numbers you can live with for the next 24 months (not forever, just the next two years while things can be bumpy):
- Fixed needs: mortgage/rent, utilities, groceries, insurance premiums, property taxes, basic transportation, minimum debt payments.
- Variable wants: dining out, travel, gifts, nicer car stuff, home upgrades.
- One-time/known costs in the next 24 months: roof, dental implant, kid’s wedding, new laptop, that dumb-but-necessary HVAC. Put dates on these.
Now set the hurdle: target 12-24 months of runway for essentials (the fixed needs above) in cash and short-term Treasuries. The mechanics are simple: keep 3-6 months in high-yield cash for true immediacy; ladder 6-18 months in 1-12 month T-bills so maturities show up monthly. That way you’re not forced to sell stocks or long bonds at a bad time. I know, it feels conservative. That’s the point. EBRI’s 2024 Retirement Confidence Survey found roughly 4 in 10 retirees retired earlier than planned, layoffs and health were common reasons, so cushion isn’t optional when jobs wobble.
Stress-test withdrawals: take your current portfolio and model a -20% drop in year one. Ask: at a 3.5%-4% initial withdrawal, does the plan still cash flow after that hit? If yes, good. If you’re uneasy, shave the initial draw by 0.25%-0.5% and reassess. This isn’t theology, it’s margin of safety. And yes, do the math with fees and taxes in there (people forget taxes, then they get surprised, seen it a hundred times).
Include job-loss scenarios: If pay ends this quarter, what’s the gap until Medicare (65), ACA coverage year-to-year premiums, Social Security (62-70), or pension start dates? Build that timeline first, then plug numbers. Health premiums can swing a lot; if income drops, ACA subsidies can offset some of the hit, but only if you estimate income correctly. Honestly, don’t wing this, price plans on Healthcare.gov with your realistic income floor.
Map inflows by month. Timing matters more than averages here:
- Severance (start/end dates and any benefits carryover)
- Unemployment insurance (state-dependent timing and amounts)
- RSUs/PSUs (vesting calendar, net after tax withholding)
- Pension (lump vs monthly; if lump, align it with a T-bill ladder on day one)
- Social Security (application lead time; first payment month)
Quick example (round numbers): your essential spend is $6,000/month; wants are $2,000; known one-time roof in 8 months is $12,000. You park $72,000 (12 months of essentials) in cash/T-bills, plus a $12,000 8-month T-bill earmarked for the roof. Portfolio is $1.2M. You test a -20% year-one drop to $960k. At a 3.75% initial withdrawal, that’s ~$36,000/year, or $3,000/month, meaning your runway covers the other $3,000 of essentials while markets heal, and you pause most “wants” for a year. If that still makes you sweat, cut the initial draw to 3.5% and revisit later, nobody gets a medal for stubborn withdrawals.
Anyway, put it all on one page: a monthly schedule of inflows vs outflows for the next 24 months. Color code it if you have to. If months go negative even with the cash/T-bill runway, you’ve got three levers: trim wants, delay a one-time item, or add income (bridge work, partial claim timing, or short-term consulting, you know the drill). Small changes, made early, fix big problems.
Bottom line: hold 12-24 months of essentials in cash-like assets, test a 20% shock with a 3.5%-4% withdrawal, and line up monthly inflows before the first paycheck stops. Plans don’t need to be perfect; they need to be liquid and resilient.
Timing Social Security and pensions when layoffs are up
Look, when paychecks feel shaky, Social Security and your pension become the biggest levers you control. The SSA’s rules are timeless on one point: delaying Social Security from your Full Retirement Age (FRA) to age 70 increases your benefit by about 8% per year via delayed retirement credits. That’s before any cost-of-living adjustments. The catch is cash flow. If you delay, you need a realistic bridge, cash, T-bills, part-time work, so you don’t torpedo the plan with high-interest debt after three months. I’ve seen that movie and it ends the same way every time.
Break-even math is personal. Rough guide: claiming at 62 cuts your monthly check versus FRA, and delaying to 70 boosts it. For many people, the “wait to 70” approach breaks even in your early 80s. But your health, your spouse’s age, and whether maximizing the survivor benefit matters can swing the decision. If you’re the higher earner and healthy, delaying has real value because the survivor typically steps into your higher benefit. If longevity looks uncertain, earlier claiming can be rational. I know, it’s messy, because your life is not an actuarial table, even though the math is.
Pensions during a downturn. Speaking of which, don’t let a short cash gap push you into a permanently reduced pension. Many corporate plans apply actuarial reductions of roughly 4%-7% per year you start before the plan’s normal retirement age, varies by plan, but the cuts can be steep if you pull the trigger just to cover, say, a six-month gap. Ask HR for the early-retirement reduction table and the commutation factors. Compare the lifetime value of waiting 6-18 months versus starting now. Sometimes a small bridge job beats a lifetime haircut.
Coordinate spouses if you’re married: a common play is the higher earner delays (targeting that bigger survivor benefit) while the other spouse claims earlier or works part-time to bridge cash needs. It’s not perfect; it’s practical. And, yes, I know I just said “bridge” again, I meant it.
Mind the overlap rules. Unemployment insurance is based on prior wages and state rules; “retiring” isn’t required to claim UI. But some states reduce UI if you start a pension, and a few have interactions with Social Security. The rules change, so verify your state’s current guidance before you file anything. I’ve seen folks unintentionally trigger offsets because they checked the wrong box or started a small pension annuity mid-claim.
Don’t forget the earnings test if you work before FRA. Social Security can withhold benefits if your earnings exceed the annual limit. The SSA publishes the yearly dollar limits; the rule of thumb is $1 withheld for every $2 above the limit before FRA, and $1 for every $3 in the year you reach FRA (with a higher limit). Use the current-year figure when you actually file, seriously, use the current-year figure. And remember, withheld benefits are not lost; they adjust your payment at FRA.
Practical checklist (because decisions feel heavier when layoffs tick up and markets are choppy this year):
- Price the bridge: how many months of cash/T-bills cover essentials if you delay to 67 or 70?
- Run 62 vs 67 vs 70 scenarios including survivor benefits and realistic longevity assumptions.
- Pull your pension’s early-retirement table and model lifetime totals, not just “first-year income.”
- Coordinate with your spouse, one delays, one bridges, keep taxes in view.
- Check state UI rules for pension/SS offsets before claiming anything; timing matters.
- If working pre-FRA, plan around the earnings test limits to avoid surprise withholdings.
Anyway, the headline question, “should-i-delay-retirement-amid-rising-unemployment?”, doesn’t have a single answer. But the framework is stable: maximize guaranteed income when feasible, only if your bridge is solid and your health and family priorities line up. Markets will settle; permanent benefit reductions won’t. That’s the thing, that’s the thing.
Portfolio defense: sequence risk is the real enemy
Look, rising unemployment and choppy markets are like bad roommates, they tend to show up together and eat your food. The jobless rate usually climbs into and through recessions, and when pink slips hit the headlines, equity drawdowns get stickier. Sequence risk is the problem: bad returns early in retirement do way more damage than the same returns later. We’ve seen it before. From 2000-2002 the S&P 500 fell roughly 49% peak-to-trough; in 2007-2009 it dropped about 57% (S&P data). If you were pulling 4% a year from a stock-heavy portfolio during those windows, your withdrawal rate effectively jumped as your base shrank. I’ve watched clients live this in real time; the math bites.
So, the antidote is boring on purpose. Build a runway so you don’t have to sell stocks at bad prices.
- Hold 2-3 years of essential expenses in cash and short T-bills. Think FDIC cash, money market funds, or very short-duration Treasuries. If your essentials are $80k/yr, that’s $160k-$240k. It feels fat, but the point is to avoid forced selling.
- Extend to 4-5 years with high-quality bonds. Use investment-grade, short-to-intermediate duration. That gets you up to a five-year cushion so equities can heal during a selloff.
- Favor quality and cash flow. When layoffs rise, balance sheets matter. Stick with investment-grade credit and equity income streams with durable dividend coverage; dividend cuts cluster around recessions. As I mentioned earlier, defensiveness is a feature, not a bug.
On the bond side, the safe-income math actually improved starting in 2023. Real yields on TIPS turned positive and have stayed there. The 10-year TIPS real yield spent much of 2024-2025 around roughly 1.5%-2.5% (market data). That means your “inflation-proof” ladder isn’t just a concept, it pays a real return. Consider a TIPS ladder for the next 3-7 years of known liabilities. Note the specific yields when you buy, not last year’s; they move. I’m still figuring this out myself in my own IRA because, you know, I occassionally get cute with duration and then regret it.
Rules beat feelings. Set your rebalancing on rails.
Emotions lie in drawdowns. Rules don’t. Use a calendar (quarterly/semiannual) or bands. The old “5/25” rule is simple: if an asset class drifts 5 percentage points or 25% relative from target (whichever is larger), trade back. Sell winners, buy laggards. It’s the opposite of what your gut will tell you at -20%.
Taxes: use the tape. Harvest losses in taxable accounts during selloffs to bank future relief. The U.S. wash-sale rule is 30 days before/after, avoid “substantially identical” replacements. Realized capital losses can offset gains dollar-for-dollar and up to $3,000 of ordinary income per year, with unlimited carryforwards (IRS rules). Swap into close-but-not-identical ETFs to maintain exposure while the clock runs.
Anyway, if you’re asking “should-i-delay-retirement-amid-rising-unemployment?”, portfolio defense is what lets you choose, not the market. A five-year liquidity-and-quality stack means you can wait out volatility without flinching. If the labor picture worsens later this year, you’re still writing yourself the same paycheck from safe assets while equities recover, or not. Actually, let me rephrase that: you’re buying time. Time is the whole ballgame… but that’s just my take on it. And for what it’s worth, I topped up my own cash bucket earlier this year after seeing a couple of friends get caught in a tech layoff cycle.
Work-optional moves: bridge jobs, benefits, and the paycheck puzzle
So, if you’re on the fence, part-time or project work buys you time without locking you into lower benefits. This is especially true right now, when the labor market has cooled a bit and job openings have normalized from those 2022 highs, wage growth is still okay, but the power balance isn’t what it was. Bridge work for even 12-24 months can materially change your odds. Here’s the math that actually matters: a $1,000,000 portfolio with a 4% withdrawal plan needs $40,000 in year one. If you pick up $20,000-$25,000 of income, you’ve effectively cut withdrawals by ~50% during the riskiest window for sequence-of-returns damage. If markets are down 20% early in retirement (not crazy, we’ve seen that kind of drawdown more than a few times since 2000), reducing the withdrawal bite in that first year slows the compounding drag in every later year. Small dollars early have outsized effects. I’ve watched this play out on actual client statements, not just spreadsheets.
Benefits are the catch. Part-time roles often exclude health insurance. That pushes you to one of three places: COBRA, an ACA marketplace plan, or, if you’re 65+, Medicare. COBRA continuation coverage generally lasts up to 18 months for you and dependents after a qualifying event (Department of Labor rules), and yes the bill can sting because you pay the full premium plus a 2% admin fee. The upside is continuity of care during a fragile transition. On the ACA side, remember the current rules: enhanced subsidies are still in place through 2025, capping the benchmark silver premium at roughly 8.5% of household income (American Rescue Plan, extended by the Inflation Reduction Act). There isn’t a hard 400% FPL “cliff” this year, but there are cliffs: cost-sharing reductions drop off above 250% of the Federal Poverty Level, and Medicaid eligibility ends above about 138% FPL in expansion states. Speaking of which, your ACA subsidy uses household MAGI, so Roth conversions, capital gains, even interest income can nudge you into a worse subsidy bracket.
Anyway, here’s how I’d frame the paycheck puzzle while the unemployment picture is a bit shakier than last year. If you’re laid off, do not accept any “retirement” label from HR before you confirm state unemployment insurance eligibility and timing. Some states offset or delay benefits if you take severance, others don’t; some treat “voluntary retirement” as a disqualifier. The difference can be thousands of dollars over a few months, cash flow you’d otherwise have to withdraw from your portfolio while stocks are, you know, moody.
Rule of thumb: 12-24 months of bridge income + strict withdrawal discipline can shave your portfolio withdrawals by 30-60% during a bad stretch. That’s often the difference between tapping equities at lows and letting the recovery do the heavy lifting.
What work fits? I think consulting, fractional gigs, or seasonal roles you can dial up or down. The goal isn’t a new career; it’s controlled cash flow. Target $20k-$35k if that gets you below the ACA 8.5% premium cap while avoiding those CSR and Medicaid cliffs. If I remember correctly, last open enrollment showed a lot of 60-64 year-olds running their MAGI right under a threshold just to keep deductibles low, smart move, a little tedious.
- Negotiate severance with benefits continuation. A few extra months of employer health coverage can be worth more than the cash, especially if you’re mid-treatment or have high-cost meds.
- Ask about part-time eligibility. Some employers prorate benefits at 30+ hours; many don’t. Get it in writing.
- Manage MAGI consciously. Time consulting invoices, delay Roth conversions, or realize losses to keep ACA subsidies intact for the calendar year.
- Use COBRA as a bridge. If you’re 63-64, 18 months of COBRA can carry you to Medicare at 65 without network disruption.
- Stack cash buckets. Pair bridge income with a 12-24 month cash reserve so you can skip portfolio sales during down weeks.
And forgive the enthusiasm here, but this stuff works. The combination of modest income, subsidy-aware planning, and withdrawal cuts is boring and effective. I’ve done it myself between gigs, wasn’t glamorous, but it kept me from selling quality names in a trough. Actually, let me rephrase that: it kept future-me from sending present-me an angry email.
Taxes and healthcare: the traps that derail 2025 retirements
Look, the second you stop getting a W‑2, the tax and healthcare rules stop being “background noise” and start steering the whole ship. ACA premiums, Medicare timing, IRMAA, state taxes, you know, all the fun stuff. The thing is, a great investment plan can still get kneecapped by one sloppy healthcare or tax move right as you retire.
ACA premiums are income-sensitive, and it’s touchy right now. For 2025 marketplace coverage, the premium tax credit still uses the enhanced rules that cap your expected contribution at up to 8.5% of household income (the ARPA/IRA extension runs through 2025). Also, the marketplace uses the 2024 Federal Poverty Level (FPL) to size subsidies for 2025 coverage. For a single filer in the 48 states, 100% FPL is $15,060 and 400% FPL is $60,240 (2024 FPL). A tiny Roth conversion, a surprise consulting invoice, or a capital gain can nudge your Modified AGI higher and lower your subsidy. Actually, let me rephrase that: it can nuke the subsidy for the rest of the calendar year if you overshoot. So, manage MAGI with intent, bill in January, not December; bunch deductions; harvest losses when markets wobble.
Medicare starts at 65, miss the windows and you pay, potentially for life. The Initial Enrollment Period is the seven-month window around your 65th birthday. If you miss and don’t have credible coverage, Part B adds a 10% penalty for each full 12-month period you could’ve enrolled and didn’t, for life. Part D’s late penalty stacks at 1% of the national base premium per month without credible drug coverage (the base was $34.70 in 2024). If you’re retiring at 63-64, COBRA or ACA can bridge you to 65 without disrupting doctors, which is worth more than it sounds when you’ve got established specialists. Speaking of which, confirm your drugs are on formulary before you flip plans.
Gap years can be tax goldmines, within guardrails. Low-income years (right after you retire, before RMDs and Social Security) are prime for Roth conversions and capital-gains harvesting. But set speed limits: push conversions only to the top of a chosen bracket and stop before you trip higher ACA expected-contribution tiers or future Medicare surcharges. Remember, IRMAA uses a two-year lookback, your 2025 Medicare premiums are based on 2023 MAGI, and 2026 will look at 2024. In 2024, the first IRMAA bracket kicked in at MAGI above $103,000 (single) or $206,000 (married filing jointly). The numbers move with inflation, but the idea doesn’t: a big conversion now can cost you two years later.
Withdrawal order matters, and it isn’t set-it-and-forget-it. A sensible baseline is: taxable accounts first (harvest gains/losses, use the 0% capital gains band if it fits your MAGI plan), then traditional IRAs/401(k)s (to manage brackets and pre-RMD balances), while seeding Roth for later flexibility. In down markets, pause sales and use your cash bucket; in up markets, refill it. Sounds repetitive because it is repetitive, discipline beats clever.
If you keep working, don’t ignore payroll and state tax drag. Side gigs still owe 12.4% Social Security combined (employer+employee) up to the annual wage base and 2.9% Medicare HI (plus the 0.9% surtax above $200k single/$250k MFJ). For reference, the Social Security wage base was $168,600 in 2024. Remote and multi-state consulting can create filing obligations in two or more states; apportion income where you physically work to avoid paying double. I know, it’s annoying, tell your CPA early rather than after 20 invoices are out the door.
Here’s the thing, I get way too enthusiastic about this part, and I know that’s not normal. But the savings are real. A client last year trimmed MAGI by about $9k with timing tweaks and kept an ACA subsidy worth several thousand dollars for the year. Another used a two-step Roth plan in Q2 and Q4 to stay under an IRMAA line that would’ve added hundreds per month to future Medicare premiums. Boring moves, big results.
Quick checklist for 2025:
- Project 2025 MAGI monthly; hold conversions/invoices until the new year if you’re near an ACA cliff (remember: 8.5% cap still applies in 2025).
- Bridge to Medicare with COBRA or ACA; calendar your Initial Enrollment Period to the day.
- Run IRMAA lookbacks: anything you do now can show up two years later.
- Use taxable → traditional → Roth sequencing, but flex to markets and tax brackets.
- Side work: estimate payroll taxes and check multi-state rules before you start.
Anyway, none of this is glamorous. But it’s the difference between a smooth 2025 retirement and a “why is my premium $800 higher?” surprise. I’ve been there, between gigs I learned to time income, and it paid for itself. Twice.
So, should you delay? A no-nonsense checklist for right now
So, should you delay? A no‑nonsense checklist for right now
Look, here’s the thing, this decision isn’t about bravado or headlines, it’s about cash flow, sequence risk, and keeping your options open while unemployment is ticking up this year. If you want a quick gut-check you can actually finish this month, use this:
- Cash runway test: If you can’t cover 12-24 months of essential expenses from cash, short-term Treasuries, CDs, or a stable sleeve, without selling equities, consider delaying or adding a bridge income. This isn’t perfection; it’s permission to avoid panic-selling after a bad quarter.
- Social Security reality check: The SSA’s math is what it is: claiming at 62 can cut your monthly benefit by about 30% if your Full Retirement Age is 67, while delaying after FRA adds roughly 8% per year up to age 70. That’s about a 24% bump from 67 to 70, and survivor benefits ride that higher number. If you have other income to live on, you probably lean toward delay.
- Healthcare pricing, not guessing: COBRA is usually 102% of your employer plan cost. In 2023, the average employer family premium was $23,968 and single was $8,435 (KFF). That’s the ballpark you might face if you pay the full freight. The ACA’s 8.5% cap on the benchmark Silver plan remains in place for 2025, but cliff-ish effects still happen if your income jumps. Price ACA/COBRA now, don’t assume.
- Market stress-test: If your plan still works with a -20% portfolio hit and a 3.5%-4% withdrawal rate, a green light is more reasonable, even with higher unemployment. If it breaks, you don’t need heroics; you need more buffer or a bridge job.
- Write the rules, seriously, in writing: Note when you’ll rebalance (e.g., 5% bands), when you’ll claim Social Security, which accounts to tap first (taxable → traditional → Roth, unless brackets/markets say otherwise), and when you’d take a bridge job. Put it in a one-pager. Future-you will thank you.
Actually, wait, let me clarify that healthcare bit, I’ve seen people guess they’ll “be fine on COBRA” and then get hit with $2,000+ per month for family coverage because they didn’t realize they’d owe the employer + 2% admin fee. That’s not a scare tactic; it’s what the rules say. And because 2025 still has the 8.5% ACA affordability cap, your premium can scale with income, but only if you keep Modified AGI in range, which is why timing Roth conversions and 1099 invoices matters right now.
On Social Security, I get the urge to claim early, cash feels good. But the math is stubborn, and survivor benefits are affected by early claiming. If your spouse might outlive you by a decade (statistically not rare), the delay credit can be a quiet lifesaver. I’ve watched this play out, painfully, when people rushed because “the market feels toppy.” Markets dip, recover, and wander; your benefit formula doesn’t care about your feelings. Mine doesn’t either, frankly.
Okay, enthusiasm spike here, because this part works every time:
- Build your 24‑month cash map: List essential expenses, subtract any guaranteed income, and match the gap with cash, CDs, T‑Bills, or a money market. Over-explain it to yourself if you must, the point is you can wake up tomorrow and know the next 24 rent/mortgage, utilities, and groceries are funded without selling stock at a bad time.
- Price your health coverage: Get actual quotes for COBRA and ACA (with your 2025 MAGI estimates). Screenshot the numbers. If you’re near an ACA cliff, plan income smoothing, yes, that could mean delaying a conversion until January.
- Write your Social Security/pension timing plan: One page: target month, break-glass rules if markets drop, and coordination with survivor benefits. Done is better than perfect.
Challenge: Block 90 minutes this week to do those three things. Calendar it, no excuses. If your -20% stress-test with a 3.5%-4% draw still passes and healthcare is affordable, green light. If not, delay or add a bridge job. Simple, not easy.
Anyway, if you can’t fund 12-24 months without selling equities, if claiming now would materially shrink lifetime or survivor benefits, and if a layoff would shove you into pricey coverage, you delay, or add income, on purpose. If your plan survives the stress-test and the numbers line up, proceed. And if you’re still stuck, email yourself a note that says: “I will revisit this after the 90‑minute session,” because sometimes the only real problem is we didn’t schedule the work.
Frequently Asked Questions
Q: How do I build a margin of safety if I might retire in the next 12 months and unemployment is ticking up?
A: Start with cash. Hold 12-24 months of essential expenses (mortgage/taxes/insurance/healthcare/groceries) in high‑yield savings or T‑bills so a layoff or a market drop doesn’t force bad decisions. Trim baseline spending by 5-10% for now, and stress‑test a nasty combo: 6-12 months without pay, stocks down ~20%, bonds flat. That’s the kind of scenario the article talks about, and it’s not theoretical, 2022 reminded us that a 60/40 can be down double‑digits. While you’re at it, line up a “needs first” income stack: Social Security (when you actually file), any pension, a TIPS ladder or 1-2 year cash bucket, maybe a small SPIA for core bills. Then keep your market portfolio for wants. If you can’t cover needs for two years without selling stocks, delay retirement or reduce risk now (e.g., dial equities down 10-15 points temporarily).
Q: What’s the difference between delaying Social Security and filing now if I get laid off?
A: Filing early (62) cuts your monthly check by roughly 25-30% vs your full retirement age, while delaying beyond FRA adds about 8% per year up to 70 (per SSA rules). That’s a big, permanent swing. The pros in the article try to keep options open: they hold enough liquidity so they don’t have to file out of panic during a layoff. Practically, you can “bridge” by spending cash/T‑bills first, or drawing modestly from an IRA while managing taxes, think staying in a target bracket, maybe doing small Roth conversions in low‑income months. If you’re married, consider filing strategies that maximize the higher earner’s benefit by delaying that one, since it drives survivor benefits. Net: if you can cover essentials from savings for 12-24 months, delaying often wins; if not, partial work, a smaller draw, or a short‑term annuity can buy you time.
Q: Is it better to delay retirement or just cut my spending and go for it?
A: If you don’t have at least 2 years of essential expenses in safe assets and your job looks shaky, it’s better to delay. I know that’s not fun to hear. But sequence risk is cruel right as you start withdrawals. A workable rule of thumb: retire now only if (1) needs are covered for 24 months with cash/T‑bills/TIPS or guaranteed income, (2) you can live on a 3.5-4% withdrawal rate after cutting non‑essentials, and (3) you’re comfortable with a slightly more conservative mix for the first 2-3 years. Otherwise, push the date a bit, stockpile cash, and tighten spending. Look, cutting lattes won’t fix a weak balance sheet, you need runway.
Q: Should I worry about healthcare if I’m laid off right before retiring?
A: Yes, plan it before you hand in the badge. If you’re under 65, price COBRA (usually expensive but immediate) vs an ACA marketplace plan; a lower income year may qualify you for premium tax credits, but watch mid‑year income spikes that could claw those back. If you’re 65+, enroll in Medicare on time to avoid penalties; if you lost employer coverage, use a Special Enrollment Period. Also watch IRMAA: Medicare surcharges are based on your tax return from two years ago, but you can file a life‑event appeal after income drops. Keep HSA dollars invested conservatively, you can use them tax‑free for premiums on COBRA and for out‑of‑pocket costs (not for regular Medicare premiums except Part B, Part D, and Medicare Advantage). Bottom line: secure coverage first, then decide on retirement timing. I’ve seen folks retire, then scramble for coverage, don’t do that to yourself, you know?
@article{should-you-delay-retirement-as-unemployment-rises,
title = {Should You Delay Retirement as Unemployment Rises?},
author = {Beeri Sparks},
year = {2025},
journal = {Bankpointe},
url = {https://bankpointe.com/articles/delay-retirement-rising-unemployment/}
} 