Those in pre-retirement ages who ultimately leave their jobs for reasons other than retirement commonly experience a significant financial setback as a result, according to a study by the Urban Institute that in effect underscores the value in remaining with an employer late in a career.
The report examined what it called involuntary job losses over time among those age 50-54, finding that in addition to layoffs or closings–much more common in the private sector than in government–many left before their earlier projected date. Common reasons included dissatisfaction with the job, poor personal health and family reasons.
Overall, they experienced a “significantly reduced household income,” with the median amount–where half are above and half are below–falling 42 percent, it said. Although such workers might be able to replace at least some of their former earnings with a new job, it’s common for them to experience “long spells of nonwork or substantially reduced earnings.”
As a result, they “must often tap their retirement savings earlier than expected and collect early Social Security retirement benefits that permanently reduce their monthly payments.”
“Few workers bounced back financially after experiencing an involuntary job separation that reduced weekly earnings more than 50 percent for at least two years. Only 10 percent of adults who were working full time, full year at ages 51 to 54 for a long-term employer and experienced such an involuntary separation ever earned as much per week after their separation as before,” it said.