What to Do If You're Retired and Broke

Planning for retirement is something we should all do. But in recent years it has proved harder and harder. Employers have cut back on pensions and thrown more responsibility for retirement onto individual employees. And most employees have faced negligible wage growth, making it harder than ever to put aside funds for retirement.

So, what if you didn't save enough for retirement? Perhaps your retirement plans were blown away by a health problem that forced you to retire earlier than expected. Or maybe you faced a layoff in your late 50s or early 60s, robbing you of those last few years of income. What can you do now?

I was laid off in my mid-50s during the great recession, when nobody was hiring, especially people in their 50s. There was no way I was going to be able to pick up the phone, call a friend and find another job.

So what do you do if you find yourself retired, and suddenly you have no income? Here are five suggestions.

1. Research your benefits. Find out what your old employer owes to you in terms of pension, severance, health insurance or any other obligations. You may be eligible for disability, unemployment benefits or other forms of support from the government, a union or professional association. I was booted out of my old employer's health insurance, but found new affordable insurance through my professional association. Now there's the Affordable Care Act, which may be a lifesaver for many early retirees. Also, decide if you need to start withdrawing money from your individual retirement accounts, which you can do without penalty starting at age 59 ½, or if you should start taking Social Security as early as age 62. You'll receive a smaller monthly benefit, but if you need it, take it now.

2. Go back to work. Your options may be limited, but that doesn't mean you're at a dead end. There may be opportunities for retraining. One over-50 friend of mine found a program that trains secondary school science teachers. He didn't know much science, but he had a solid educational background, so he got into the program. Nine months later he was a substitute teacher, and a year after that he was hired full time, with benefits. I wasn't so lucky. But I did find part-time work with other companies in my industry, and also with my old employer. I had to swallow a little pride to go back to work for them, but I needed the income more than I needed any false pride.

3. Downsize your expenses. Fortunately for me, by the time I was laid off my kids were mostly grown, so those financial obligations were basically over. We sold our house and moved into a condominium. I was not thrilled about it, but it didn't take long before I made new friends and started to appreciate the extra time I had because I no longer had to do yardwork or home maintenance. The key is not to panic, but to focus on the big expenses, like housing costs, and then cut out smaller things that aren't important to you, whether it's the membership to a pool and tennis club that you no longer use or the expensive vacation that was never as much fun as you thought it was going to be anyway.

4. Get creative. Think about your hobbies. Do they cost you a lot of money? I know several golfers who quit their private club to play in a league at a public course -- at a quarter of the cost, but just as much fun. One woman who liked doing crafts with her children, for free, now peddles her projects on Etsy. My brother-in-law took up woodworking after early retirement and now sells his wares at a shop in town. You could consider renting a room in your house through Airbnb, or renting your whole house through HomeAway when you're on vacation. There are ways to make money if you think outside the old corporate box.

5. Rely on family and friends. You don't want to sponge off friends, but you can do favors for one another or trade services. I have another brother-in-law who lost his job a few years ago. He moved in with his sister and her husband, who had extra rooms now that their kids were grown. He pays a modest rent, helps around the house and now most days they sit down companionably for a family dinner. One day last summer when he was in the kitchen fixing a pitcher of drinks we realized that he had both literally and figuratively made lemons into lemonade.

Tom Sightings is the author of "You Only Retire Once" and blogs at Sightings at 60.