Laid off at 50: What next?

It's a nightmare. And if you think it couldn't happen to you, you're kidding yourself. Here's your best game plan.

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By Paul Keegan, Money Magazine contributing writer

Nearly a year after losing her job, Rita Alberici, 52, keeps hearing she's overqualified: "I've learned that's code for 'You're too old.'"
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(Money Magazine) -- Jerry Prine has always been a successful guy, rising to senior marketing executive at Wang Labs and the Harris Corp. before helping to launch a wireless start-up. His wife Lisa never had to work; he has nearly paid off their $500,000 house in Atlanta and put both his daughters through private colleges.

But three years ago, at age 55, Prine went through a crisis that could easily happen to you, if it hasn't already. When his start-up was sold, Prine was laid off.

And that's not the worst part. Once he started searching for a new job, he found that his expertise in cutting-edge wireless technology seemed to mean very little. At one company, a younger manager told him that he was "too big a threat." At another, an executive about Prine's age said, "Young people here look at me as their coach. If you walk in here, they'd look at you as their coach."

After searching for 18 months and spending $10,000 on career consultants, Prine gave up. "I'm a sales guy, so I know rejection," he says. "But I've never experienced rejection on that scale my whole life."

With aging parents to support and not nearly enough put aside for retirement, he is now burning through most of his $400,000 savings while taking a gamble on another start-up, an organic pet-food company he joined as investor and chief operating officer a year ago.

If you've been averting your eyes from the depressing headlines about the economy, it's time to face the music: You could be next. With your 401(k) decimated, you're probably resigned to working longer than planned. But don't kid yourself. As companies continue slashing payrolls, you can't depend on holding on to your job to a ripe retirement age.

The fact that you've probably changed jobs often makes you more vulnerable when the ax falls. Studies show that workers in their late fifties are nearly twice as likely to be laid off as colleagues in their late twenties who have been with the company the same amount of time (see "The Age Penalty" below).

And when the hunt for your next job begins, it's a nightmare compared with what your younger rivals go through: You'll submit more applications before landing an interview. You'll stay unemployed longer and will likely take a pay cut when you do find work.

"If you're 40 and lose your job, it's not a problem," says Richard Guha of the Marketing Executives Networking Group (MENG). "But today, 50 is very tough and 55 is almost impossible."

Okay, now the good news. Many people look back on being laid off as the best thing that ever happened to them, forcing them to rethink goals and priorities. After a period of soul searching, unemployed fifty-somethings often find new work that is more fulfilling, lucrative or both.

As Renee Lee Rosenberg, a career coach and author of Achieving the Good Life After 50, puts it, "Getting laid off is often the perfect opportunity to rediscover your passion and purpose."

What you're up against

A big reason that finding and keeping a job after 50 is so tough is that you cost your boss more - in benefits as well as pay. The median employer cost of private health insurance claims is $1,177 for each worker 55 to 64 vs. $715 for 45- to 54- year-olds and $396 for 35- to 44-yearolds, according to the Urban Institute.

Because you're more expensive, bosses expect you to contribute more. But employers rate workers over 50 as less productive and less flexible, according to Boston College's Sloan Center on Aging and Work. Even some older workers concede the point. In a recent AARP study, 26% of older workers said they have trouble keeping up with the new technology their job requires, and 29% admit they resist learning new skills.

We know what you're thinking: "That doesn't describe me!" Maybe not, but you could still end up like Rita Alberici. Now 52, Alberici was laid off from her six-figure job as a senior credit underwriter nearly a year ago. Despite 29 years of experience, she has had only a dozen interviews and not a single offer.

"I can't help but think that age is part of it," says Alberici, who regularly swims and cycles near her home in Laguna Niguel, Calif. "I keep hearing I'm overqualified. I've learned that's code for 'You're too old.'"

When angry, it's natural to wonder if a lawsuit is your best course. But proving age discrimination is tricky, despite recent Supreme Court rulings in favor of the plaintiffs (see "Is It Legal?" at right). While age-bias complaints filed with the U.S. Equal Employment Opportunity Commission spiked by 15% in 2007, the chance of winning is slim.

Even if you feel wronged, you may not want to go to the trouble. And when you sign a severance agreement, you generally agree not to sue.

"Come on," you say. "Surely some older workers find good jobs." True, headhunters for private-equity firms report great demand for seasoned executives who can turn around a struggling company fast.

But Wendy Rothstein is more typical. Laid off last February at age 52 from her $110,000 position as development director at a nonprofit in New York City, she has been to more than 30 interviews but hasn't received a single offer.

"When you keep getting rejected, it does immeasurable damage to your self-esteem," Rothstein says. "What's wrong with you?"

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