Job losses related to the pandemic forced many older Americans to leave the workplace last year, perhaps permanently. But the COVID-19 crisis also appears to have delayed some retirements.
Remote work eliminated commuting and often allowed for more flexible hours with fewer interruptions. At the same time, the pandemic restricted many traditional retirement activities, including travel and family visits. While some older employed workers hope to retire when restrictions are eased, others say telecommuting has made staying on the job more sustainable. Tax accountant Larry B. Harris of Asheville, North Carolina, found that working from home had many things he liked, including more flexibility and less time in his car. “I had never worked from home except in a snow storm. I found out I loved it, “says Harris, 67.” I think it will keep me working longer. ” Uneven recovery, uneven impact on retirement Economists speak of a K-shaped recovery, where some of the country’s industries and population rapidly recover from the recession while others stagnate or continue to sink. Something similar may be happening with the retirements of baby boomers, as well-off workers get more options while those with fewer options lose ground. Also read: At the end of the race, maybe we should embrace the fight against retirement. The pace of retirements among baby boomers, those born between 1946 and 1964, accelerated during the pandemic, according to an analysis by the Pew Research Center of monthly labor force data. The number of boomers who reported they were out of the workforce due to retirement grew 3.2 million in the third quarter of 2020 compared to the previous year. Before the pandemic, the number of retired boomers had increased by an average of 2 million each year since 2011, when the first boom turned 65. Some people retired to avoid exposure to COVID-19, while others may have been pushed to “seize the day” by the pandemic reminder of our mortality. But massive job losses may have forced many to retire early. say economists and financial planners. One of the clients of certified financial planner Neal Van Zutphen, a woman in her 50s, lost a high-paying job in the hospitality industry. Most people who lose a full-time job at 50 years never pay off financially, according to research by the nonprofit newsroom ProPublica and the Urban Institute, a nonprofit research organization. “It’s hard to find a new position of similar caliber,” says Van Zutphen of Tempe, Arizona. “She hopes to work part-time at something.” The pandemic recession hit older workers the hardest. Older workers lost their jobs faster and returned to work more slowly last year than mid-career workers, according to a study by The New School’s Schwartz Center for Economic Policy Analysis that tracked unemployment from April to September of the year. past. The study found that, for the first time since 1973, workers aged 55 and over faced persistently higher unemployment rates than workers aged 35 to 54. Also read: Why should you plan to leave money for your children? Certain older workers – women, black, and without college degrees – were even more likely to lose their jobs. And these workers tend to save less, so they are also more exposed to retirement risks, such as downward mobility and poverty, according to the study. At the same time that the pandemic was driving millions out of the workforce, the lockdown orders gave millions of people a crash course on how to work from home. About 75% of federal government employees, for example, were working remotely in September, according to a survey by the Government Business Council, a research group. So it may not be a coincidence that far fewer federal employees retired in 2020 compared to the previous two years, according to an analysis of monthly data from the Office of Personnel Management by Federal News Network, a news outlet. covered by the federal government. The analysis found that 92,008 federal employees retired in 2020, the fewest since 2010. The bureau processed 101,580 retirements in 2019 and 107,612 in 2018. A small delay can have a big impact Employees can’t always decide when to retire, but delay when where possible, it can help shore up finances. Early departure from the workforce can increase the risk of long-term financial insecurity. Retirees may not have saved enough and could receive lower payments if they start pensions or Social Security benefits earlier than planned. Working an extra year or two allows people to save more for retirement and take advantage of higher “payback” limits on 401 (k), IRAs and health savings accounts, says Ann Arbor certified financial planner Nadine Burns , Michigan. Staying at work can also help with one of the most important retirement decisions – when to start receiving Social Security benefits. Applying before full retirement age, which ranges from 66 to 67, permanently reduces the checks that comprise a large chunk of most people’s retirement income. Read Next: 8 Steps to Fixing Your Finances (and Your Life) as We Exit the Pandemic Yet some people have few options because they don’t have enough other income to live on while they wait, says John Boroff, Director of Retirement and Solutions of income for Fidelity Investments. “If you’re still working, it’s an easier decision to postpone Social Security,” says Boroff. More from NerdWallet Liz Weston writes for NerdWallet. Email: firstname.lastname@example.org. Twitter: @lizweston.