Laid Off in Your 50s or 60s? Here Is Your Financial Survival Guide

1. Stabilize cash flow before making big moves

In the first 30–60 days after a layoff, your primary job is to stop the financial bleeding and buy yourself time to think clearly.

• Get a clear picture of your income and expenses
  Start by listing your essential monthly expenses: housing, utilities, groceries, insurance, and debt payments. Then look at what is coming in: severance, payout of unused PTO, unemployment benefits, and any income from a spouse or partner. This simple exercise tells you how big the gap really is and how many months of cushion you have.
• Use your emergency fund and flexible assets first
  If you have built up cash savings or a taxable investment account, this is exactly what those dollars are for. Using available cash or a brokerage account is generally far better than raiding retirement accounts, which can trigger taxes and potential penalties and undermine your long-term plan. Treat retirement accounts as a last line of defense, not the first lever you pull.
• Hit pause on large, discretionary decisions
  It is wise to temporarily delay big-ticket items like a kitchen remodel, new car, or major gifts to family until your next step becomes clearer. You do not have to decide everything in the first week. Giving yourself a 60–90 day “no big commitments” window can prevent decisions you will regret later.

2. Protect your long-term plan: retirement accounts, health insurance, and debt

Once you have stabilized the near-term, it is time to make deliberate choices that preserve your long-term financial health.

• Handle retirement accounts carefully
  If you had access to a 401(k) or similar plan at your former employer, you will likely have several options: leaving it where it is (if allowed), rolling it to an IRA, or eventually moving it to a new employer’s plan. Cashing it out is almost always the least attractive choice because distributions can be fully taxable and, if you are younger than 59½, may be subject to an additional penalty. The guiding goal: keep those dollars working for retirement rather than turning them into short-term income if you have other options.
  • 401(k) Loans: Note that 401(k) loans typically must be repaid within 60-90 days after a layoff or they are treated as taxable income and can also trigger a 10% early withdrawal penalty if you’re under age 59½, so make sure to repay it if you have an outstanding loan. Use caution with taking out a 401(k) loan if there is any chance of a layoff in the near future.
• Make a smart health insurance decision
  Losing employer coverage can be one of the most stressful parts of a layoff, especially if you are not yet eligible for Medicare. You may have access to COBRA, a spouse’s plan, or coverage on the Affordable Care Act marketplace. COBRA can be convenient but expensive, while ACA plans may be more affordable depending on your income level. The key is to avoid gaps in coverage that could turn a health event into a severe financial setback.
• Stay current on debt and protect your credit
  If cash feels tight, it is tempting to let some bills slide. Instead, aim to make at least minimum payments on all loans and credit cards to preserve your credit score. If you see trouble coming, call your lenders early; many will work with you on temporary hardship programs, lower interest rates, or modified payment schedules. What you want to avoid is high-interest new debt that makes your eventual recovery harder.

3. Position yourself for the next chapter (financially and professionally)

After the initial turbulence, the focus shifts toward your next move, both for work and for your broader life plan.

• Build an income bridge that protects your savings
  For many people in their 50s and 60s, the next role may not look like the last one. Short-term consulting, part-time work, or project-based roles can serve as a bridge, letting you cover more of your expenses while you search for the right long-term fit. Even modest income can meaningfully reduce the draw on your portfolio and extend the life of your savings.
• Revisit your retirement timeline and Social Security strategy
  An unexpected layoff may accelerate your retirement, delay it, or redirect it. This is a good moment to revisit your plan: what happens if you do not work for a year, or if your next role pays less but offers more flexibility? How would claiming Social Security at 62, 67, or 70 affect your long-term picture? Running these scenarios can turn a vague fear (“I am off track”) into concrete numbers you can plan around.
• Use the transition to realign money with your values
  While a layoff is unwelcome, it can also be a catalyst to rethink what you want your next decade to look like. Are there parts of your lifestyle that no longer fit your priorities? Are there career paths or types of work you have put off exploring? Setting a simple 90-day action plan that includes updating your résumé and LinkedIn, networking intentionally, reviewing your budget, and clarifying your “must haves” and “nice to haves” can help you move from reacting to leading.

Facing a layoff in midlife is hard, but you do not have to navigate it alone. Thoughtful, early decisions can protect both your short-term security and your long-term retirement goals. If you know someone who has recently been laid off, consider forwarding this article to them; they may not know where to start, and a calm, practical roadmap can be a real relief.

And if you or someone you care about is working through these questions and wants an experienced guide, we would be glad to help. Reach out to KN Family Wealth to talk through your options, stress-test your retirement plan, and create a clear path forward from here.