‘Too old to hire and too young to retire’: What happens to American workers who are laid off at 60 — and what to do if it happens to you

But if you’re nearing retirement — and not ready to retire, either financially or psychologically — it can be hard to recover from an unexpected layoff. After all, how do you convince a would-be employer that you’re in it for the long haul?

“They may find themselves trapped between being too old to hire and too young to retire,” Catherine Collinson, CEO of the nonprofit Transamerica Institute, told USA Today.

When are you ‘too old’ to hire?

Most employers consider themselves to be ‘age-friendly’ — but that’s not necessarily the reality for many older employees.

About nine in 10 employers (89%) consider themselves to be age-friendly, according to Transamerica Institute’s Employers, Workers, and the New World of Work report, published in May. Yet, only 72% of employees feel that’s the case.

When asked how old is “too old” to hire someone, 63% of employers said it “depends on the person.” But of those who provided a specific number, the median age that makes you “too old” to hire is 65.

Notably, in Transamerica Institute’s 2023 survey, the median age that makes you “too old” was 58.

So if you’re laid off in your late 50s or early 60s, finding a new job could be challenging.

Last year, in testimony before the Senate Special Committee on Aging, Nancy LeaMond — AARP’s chief advocacy and engagement officer — said that AI-driven algorithms could be screening out older candidates.

“Algorithms used to scan résumés and applications can accelerate bias using graduation dates or years of experience as proxies for age,” LeaMond told the Senate Committee.

AARP’s research has shown that ageism in the workplace is commonplace. In 2025, about two-thirds (64%) of workers 50+ said they saw or experienced age discrimination in the workplace. And 22% said they feel like they’re being pushed out because of their age.

Ageism comes in many forms, including job searches. Subtle forms of discrimination include assumptions that older workers aren’t tech-savvy or that they’re resistant to change.

Joanne Dority told USA Today that after getting terminated from her tech job at 62, she found that whenever she encountered younger hiring supervisors during her job hunt, she wouldn’t make the cut.

“At some point, you’re just too old to be in tech,” she said. She eventually found work through a connection on LinkedIn — hired by someone her age.

What to do if this happens to you

You can’t claim Social Security until age 62 — and at that point, since you’re claiming before your full retirement age at 67, you’d be accepting a 30% permanent cut to your benefits. And Medicare doesn’t kick in until age 65.

So, if you’ve been laid off, put the brakes on spending. Ideally, you’ll have an emergency fund that covers three to six months of expenses to help you get by.

Don’t make any major decisions until you crunch the numbers. What are your expenses? How much do you have in savings? If you’re ready to retire, do you have enough in savings to retire comfortably? In the meantime, how much will health insurance cost?

Once you’re 59 ½, you can start tapping into retirement accounts such as 401(k) plans and individual retirement accounts (IRAs). Otherwise, you’ll face a 10% penalty — plus, any income you withdraw will be taxed as ordinary income.

There is an exception: If you’re at least 55, you can take penalty-free withdrawals from the 401(k) at your last employer before age 59 ½. However, this doesn’t apply to withdrawals from 401(k)s at previous employers — those are still subject to the 10% penalty.

Another option is something called the substantially equal periodic payment, or SEPP, plan. In this case, you can also make penalty-free withdrawals from retirement accounts before age 59 ½.

But, you’ll have to commit to consistent withdrawals for at least five years (or until age 59 ½) using an IRS-approved calculation method: amortization, annuitization or requirement minimum distribution (RMD).