Retirement Planning, Elder Law, and Senior Finance

9/23/2020 | By Terri L. Jones

Working from home has kept many of us in a comfy cocoon, safe from COVID-19. However, when your job is driving a bus or working in a manufacturing plant, you don’t have the freedom to work remotely. You may have had to choose between your health and a paycheck. Or perhaps you were the victim of downsizing; or your company just couldn’t afford your high paycheck anymore.

Whatever the case, the pandemic has forced many seniors into early, unplanned, and unwanted retirements this year, according to an August article in the New York Times.

Experience Equals Less Clout

The unemployment rate among those 65 and older quadrupled between March and April, compared to the overall unemployment rate, which was three times higher than normal. In fact, 2.9 million workers ages 55 to 70 left the job market from the beginning of the pandemic through August, reports the New School’s Retirement Equity Lab. The New School is predicting that the number may grow by another 1.1 million by November.

While experience and tenure have traditionally saved older workers’ jobs in times of economic instability, these qualifications don’t count for as much anymore. Chalk it up to companies trying to save money, weakening unions, or outright ageism. But an Urban Institute study that followed about 2,000 older workers from 1992 to 2016 found that half of those workers suffered involuntary job losses; regardless of the fact that many had stable, full-time employment and higher-than-average education levels.

The Aftereffects

The loss of a job is challenging enough, but older workers also tend to remain unemployed longer than their younger colleagues. Richard Johnson is an economist at the Urban Institute who studies employment and retirement among older adults; he reported only 41 percent of workers over the age of 62 who were laid off during the Great Recession found new jobs within 18 months. In contrast, 78 percent of 25- to 49-year-olds found new jobs.

Long gaps in employment or permanent unemployment may cause seniors to tap into their retirement savings, incur credit card debt, or take Social Security benefits early – permanently reducing their payouts. With unemployment also comes the loss of health insurance, if seniors are not yet eligible for Medicare. That loss of coverage can be particularly dangerous if the older person becomes infected with the coronavirus. Even if seniors do find employment, money often continues to be tight; and as in many cases, that new job doesn’t pay as much.

This job vulnerability isn’t only challenging for seniors. It’s also tough on the economy. According to AARP’s Longevity Economy™ Outlook, age discrimination cost the U.S. 8.6 million jobs and $545 billion in lost wages in 2018 alone.

Financial and Personal Hardships

Many of those who may be headed toward an early retirement aren’t happy about it. They planned on continuing to work to pad their retirement savings; pay off houses; or receive maximum Social Security benefits. But it’s not just about the financial loss. For many of these older workers, their vocation gave them a feeling of value, purpose, and even pleasure. That’s commonly the most devastating loss of all.

Speaking of: what do you know about pre-retirement?

Terri L. Jones

Terri L. Jones has been writing educational and informative topics for the senior industry for over ten years, and is a frequent and longtime contributor to Seniors Guide.

Terri Jones