Pandemic could cause some to postpone retirement

For many workers, retirement has long been a dream – but a global COVID-19 pandemic has forced some to reevaluate their timeline for pursuing it.

The pandemic has brought economic uncertainty across the country. For 54% of workers in the United States, this means they are actively planning to work during their retirement, according to a study of about 1,000 American adults done by Voya Financial.

Forty percent of those respondents say they plan to remain working even after they retire in order to provide themselves with a financial buffer in the event of future uncertainty and to offset any unforeseen costs that might arise.

Even before the pandemic, almost half of Americans 55 or older didn’t have any retirement savings, and many of those who do don’t have enough to get by without supplemental income.

An interesting generational pattern emerges: 60% of Gen Xers said that COVID-19 has caused them to plan to work during retirement and 59% of Baby Boomers say the same. But only 49% of millennials voiced a similar plan.

The outcome, however, is uncertain for these workers, since many who retire don’t do so voluntarily.

Schwartz Center for Economic Policy research shows that between 2014 and 2016, more than half of those retiring in their late 50s and early 60s had to do so on an involuntary basis – layoffs, business closures, poor health, and other factors often beset those planning to work during retirement.

So even with the best of intentions, some older Americans may be unable to work if forced to retire early due to pandemic-related health concerns or other reasons.

And since the recession following the COVID-19 pandemic, workers have also begun to shift their priorities, with many allotting more to savings and retirement accounts than they had originally.

While many older workers plan to continue working well into retirement, they are growing more concerned that the recession will result in more layoffs. This would require them to find new jobs – a daunting task, some feel.

In a recent Economist/ YouGov poll, 37% of workers over the age of 65 felt that if laid off during the pandemic, they would most likely have to take a pay cut – and 30% of workers between ages 45 and 64 voiced the same concern.

Younger workers felt more confident in the prospect of finding another job with roughly the same pay.

But the labor market has not always been as sympathetic to older employees to begin with, and an entire body of research demonstrates that it will often take twice as long for an older worker to find a new job than it will for a younger worker.

And that was before the pandemic. Now, a Retirement Equity Lab report has said that unemployment rates for Americans over 55 has remained higher than those of midlevel, mid-career workers for a period of longer than six months. This hasn’t happened since 1973, the study notes.

So while the data seems to indicate that older workers have lost jobs more quickly than younger workers, they have been rehired more slowly.

So with unemployment rates soaring, the changing landscape of retirement may look a little bit different for older workers.