Boomers and Retirement: The Big Question
The pandemic has become a new variable in deciding when to retire. Some near-retirees lost their jobs and decided to go ahead and turn in the towel. Others were focused on the health risk and determined it was better to retire while they were still in good health. Still, others have used this crisis as a catalyst to re-examine their career and reprioritize their work interests. Odd though it may seem, now may be a good time for near-retirees to consider launching a new career. One reason is that the labor shortage has employers clamoring for experienced talent — and that gives aging baby boomers new leverage.1
We’ve been hearing a lot about the “Great Resignation” over the last six months. As it happens, job quitting is a luxury enjoyed mainly by young adults who may have their parents as a financial backstop, adults with no debt or high-income workers who have saved well and have resources to fund time off. A recent study of quit rates among U.S. workers found that resignation rates are highest:2
- Among mid-career employees
- In the technology and health care industries
You can imagine how those scenarios work out — mid-career workers and tech professionals may have enough savings to take time off and evaluate what they want to do next; health care workers are likely suffering from burnout. And while a pandemic may not have been on anyone’s financial bingo card, it’s here, and a lot of people are using this time to take stock of their lives. This sort of crisis can happen at any time — either you lose your job, or you lose your motivation to continue that job.3 Either way, we can help you position the assets you’ve accumulated to get your money to work harder and longer — so you don’t have to. Contact us for ideas.
Historically, most people past a certain age would retire once they left a job. However, new studies show that some older workers are viewing the pandemic as a gap year. Many report that they do plan to go back into the workforce at some point, either because they must work because they can’t afford to retire, or they simply want to create a better financial foundation for their retirement. Still, others plan to go back to work because this little sojourn into retirement isn’t quite what they were expecting.4
Interestingly, one study found that baby boomers in their 60s were no more likely to leave their jobs than people in their mid-to-late 50s. In fact, the retirement rate among workers aged 55 and up barely changed from a pre-pandemic average of 12% to 13% in 2020.5
Another interesting fact from a Federal Reserve Board study revealed that one-third of retirees go back to work on a full- or part-time basis — a phenomenon dubbed “reverse retirement.” Here again, this tends to happen among lowest-income workers and the highest-income workers — both at 35%.6
Regardless of the reasons for returning to work, there is some evidence that working longer can be fulfilling for more than monetary reasons. Stephen Hawking is quoted as saying, “Work gives you meaning and purpose, and life is empty without it.” Even working as a volunteer provides a rewarding sense of giving to others and the community. Often enough, a job offers an automatic set of colleagues, friends and associates, not to mention tapping your intellectual and physical energy. 7 There’s even data from the Centers for Disease Control and Prevention that correlates being unemployed or retired with the greatest risk of poor health.8
If you’re considering going back to work now or sometime after the pandemic is better contained, you may worry about the perception of ageism in the workplace. But there is good news on this front as well. Research has shown that “mental horsepower” begins to decline after age 30. However, knowledge and expertise, which are generally key indicators of job performance, continue to grow even past age 80. Furthermore, personal traits such as curiosity drive learning new skills during late adulthood. There’s no official age limit to new skill acquisition, so don’t be intimidated by things like new technology or processes. Be curious, ask questions and build your knowledge base. These are commodities employers are looking for and will serve you well in the current job market.9
Content prepared by Kara Stefan Communications.
1 Abhinav Chugh. World Economic Forum. Nov. 29, 2021. “What is ‘The Great Resignation’? An expert explains.” https://www.weforum.org/agenda/2021/11/what-is-the-great-resignation-and-what-can-we-learn-from-it/. Accessed Dec. 27, 2021.
4 Center for Retirement Research at Boston College. Dec. 21, 2021. “COVID Hasn’t Pushed Boomers into Retiring.” https://squaredawayblog.bc.edu/squared-away/covid-hasnt-pushed-boomers-into-retiring/. Accessed Dec. 27, 2021.
6 Will Kenton. New Retirement. June 28, 2020. “Reverse Retirement: Find Out Why So Many Retirees Are Going Back to Work.” https://www.newretirement.com/retirement/reverse-retirement-find-out-why-retirees-are-going-back-to-work/. Accessed Dec. 27, 2021.
7 Josh Bersin and Tomas Chamorro-Premuzic. Harvard Business Review. Sept. 26, 2019. “The Case for Hiring Older Workers.” https://hbr.org/2019/09/the-case-for-hiring-older-workers. Accessed Dec. 27, 2021.
8 Gary Foster. Booming Encore. 2021. “How Not To Waste A Retirement.” https://boomingencore.com/en/article/how-not-waste-retirement. Accessed Dec. 27, 2021.
9 Josh Bersin and Tomas Chamorro-Premuzic. Harvard Business Review. Sept. 26, 2019. “The Case for Hiring Older Workers.” https://hbr.org/2019/09/the-case-for-hiring-older-workers. Accessed Dec. 27, 2021.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. 1/22-1989957B
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