A forced or unplanned retirement can be a devastating blow for an individual. Your monthly budget will turn upside down, worse if you pay EMIs, or even more damaging, going bankrupt.

But if this happens to someone nearing retirement and hasn’t saved enough, the situation could look even more frightening. So, what can an individual do when booted out of the job early?

Vivek S.G., a certified financial planner and founder of Wealth Crafts, a Sebi-registered investment advisor, says: “The Supreme Court has ruled that forced retirement can only be used in limited circumstances. It cannot be used as a punitive measure against an employee. It can only be used, if necessary, to protect the public interest or improve the government’s efficiency.”

He advises people facing such a situation to consult an employment lawyer to understand their rights. Those who are forced to retire may be eligible for a severance package, so it is crucial to negotiate the best possible deal. A sudden halt in income can be distressing for anyone, both mentally and financially, so the best thing to do is to start saving early for long-term goals. Still, things may not always work the way the individual wants.

Here’s what you can do if you are forced to retire.

Revisit Your Finances And Plan

Calculate your monthly expenses and determine how long your existing funds will last. It will give a clear idea of the gaps you will need to fill. So, make a financial plan again in light of the new situation and try to find a way out of the crisis, like getting into a new job, etc. This will rebuild your confidence to improve your financial position.

Make Lifestyle Adjustments 

As the proverb goes, “Cut the coat according to your cloth”, means spend what you can pay for. Reduce expenses wherever possible and save more. Vivek suggests, “While forced retirement would also mean forced search for new employment and lifestyle changes, individuals should first evaluate their financial resources and create a revised budget to accommodate the reduced income. Seeking additional part-time work or freelance opportunities can help supplement finances while also considering reducing non-essential expenses.”

Get Health Insurance 

Getting health insurance coverage should be a top priority. Those who were forcefully retired should buy a personal health policy, if they don’t have it earlier, at the first opportunity that comes their way. However, one should always buy a health plan in their first job itself, when they are young as premiums will be lower compared to the cost later.

People often ignore it if they are covered by the employer’s health insurance policy. However, during a job loss, they can no longer avail of it, unless they buy a new one or convert it into a personal insurance plan. This will help you save on costly treatments if you fall critically ill.

Set Priorities and Stay Positive 

Financial stability is critical in life, so plan accordingly. Distinguish between wants and needs. Your spending habits will determine your future financial security. Save every penny where you can until you find a stable income source.

As Vivek explains: “A forced retirement can be a new beginning; focus on the opportunities and on plans for the future.” Ensure you are in the company of people who have a positive attitude towards life; it will boost your confidence and help excel in life.