It seems many tech workers, especially those who’ve been in the game since before the dot-com bubble, are pondering retirement these days. Some are opting for it, while others… not so much.
In fact, over 113,000 people in tech are expected to face layoffs in 2026. This wave of job cuts will affect 179 companies, with big names like Meta, Amazon, Microsoft, and Alphabet included.
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Since October 2025, Amazon has let go of at least 30,000 employees. In April, Meta disclosed that 8,000 people would be laid off, which makes up about 10% of its total workforce. Microsoft, too, has been offering early retirement packages to some of its employees.
One such person is Steve Otteson, a 55-year-old former software engineer. He shared with The Seattle Times that he hadn’t planned on retiring early, but was presented with a package that offered nine months of salary, which… well, that’s pretty hard to pass up.
Tech jobs usually come with hefty paychecks and sometimes stock options, so these workers might be in a decent spot financially to think about retiring. But, there’s a catch, right? Living expenses can be sky-high. For instance, San Jose, California, is 84% above the national average, while Redmond, Washington, is about 43% higher.
Otteson acknowledges that he got “lucky” with the timing of his offer, but now he and his wife are looking at an unexpected early retirement. As he puts it, “We feel like we’re getting priced out. Our money doesn’t stretch as far anymore.”
AI, ageism, and burnout
The tech landscape is shifting dramatically. While major companies are laying off thousands, they’re also channeling funds into AI. Some employees are even involved in training AIs that might replace them later on.
Dr. Brian Robinson, a professor emeritus at UNC, remarked in Forbes that “Even if you haven’t been fired, you can still suffer from ‘firing fatigue’ just by waiting for it to happen.” The idea of facing layoffs can lead to stress and burnout, particularly since many are taking on the workload of their laid-off colleagues.
Older workers facing layoffs may struggle to find new positions. Not only is the job market shrinking for tech roles, but age bias can also come into play, especially in a field that often favors younger talent.
This isn’t solely a tech issue, though. A study from 2025 revealed that about 40% of retirees left their jobs sooner than they had intended, often due to unforeseen circumstances at work.
If you’re looking to retire at 55 and plan to tap into Social Security at 62, keep in mind that this could secure a modest check for life. Plus, if you don’t have employer health insurance, there’s a gap until Medicare kicks in at 65.
Can you afford to retire early?
Figuring out if you can retire early starts with making a retirement budget if you haven’t already.
Fidelity suggests saving 33 times your annual expenses if you plan to retire before 62. That’s actually lower than the usual 4% or 5% withdrawal rates many suggest, but, of course, a lower rate can extend your savings further.
The earliest you can claim Social Security is 62, but doing so could dock your benefits by up to 30%. If you wait until your full retirement age, which is between 66 and 67, you’d get the full benefits. Waiting even longer, until after that age, would increase your monthly benefits by 8% for each year until age 70.
If you do retire early, you can hold off on collecting Social Security until you’re at full retirement age and use other savings to make up for it. Most retirement accounts typically charge penalties for withdrawals before age 59 and a half, but there’s a “55 rule” that might let you withdraw from a 401(k) once you turn 55, though this could impact your savings later.
Healthcare costs are another piece of the puzzle. If you leave your job, you might be able to keep your employer’s health insurance for up to 18 months via COBRA.
Alternatively, you could check if your spouse’s employer offers health insurance or explore what’s available through public marketplaces. Typically, an ACA Marketplace plan averages around $625 a month, but this can vary a lot based on where you live and your age.
If you find yourself retiring sooner than anticipated but feel worried about your finances, maybe consider part-time work outside the tech sector.
Some people also look for ways to create passive income, like renting out space in their home, downsizing, or, like Otteson, moving to areas with a lower cost of living.
It’s wise to consult with a financial advisor to see if early retirement is feasible and to discuss the best strategies for maximizing your savings.
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This article was first published Moneywise.com Under the title: Older technology workers retire at age 55. But by claiming Social Security early, you can get checks for life.
This article is for information only and should not be construed as advice. PROVIDED WITHOUT WARRANTY OF ANY KIND.
