Work world: Pandemic eases some paths to retirement
More older workers are taking the pandemic as a cue to leave the daily grind, said Alexandre Tanzi and Michael Sasso in Bloomberg.com. Working Baby Boomers had been “better known for hanging on to their jobs as long as possible.” But “after a year of Zoom calls, and soaring stock and real estate values,” more are contemplating retiring earlier than they’d imagined. “About 2.7 million workers ages 55 and older plan to apply early for Social Security benefits—almost twice as many as the 1.4 million people in the same age group who anticipate working longer, according to a U.S. Census Bureau survey.” Plans can easily change, but an unprecedented surge in stock prices and home values is easing the retirement path for some Americans. Many also cite a new “life is short” mentality after the living through the pandemic. “It makes you think, ‘Does all this matter as much as you think it does?’” said Craig DiLorenzo, a former 3M executive who retired in March at age 58.
The exceptions to that trend are the workers whose finances have been “battered” by the pandemic, said Suzanne Woolley, also in Bloomberg.com. “Nearly 2 out of 5 workers were furloughed or laid off” or had their hours adjusted, and of those, about a quarter now say they don’t think they can retire “until later than planned.” That said, “life often doesn’t comply.” The latest annual survey by the Employee Benefit Research Institute (EBRI) found that while 26 percent of workers say they intended to work into their 70s, because of health or other hardships just 6 percent actually do. Regardless of age, savers now might want to consider shifting their retirement accounts before tax rates rise, said Anne Tergesen in
The Wall Street Journal. For those with big balances in a traditional IRA, “the key strategy to pursue is the Roth conversion.” You will pay income tax on a transfer, but “once you hold a Roth account for at least five years and are age 59½ or older, future withdrawals of both principal and appreciation are tax- and penalty-free.”
Employers are starting to worry about losing workers too quickly, said Camilla Cavendish in the Financial Times. “I have been shocked to meet executives in big consulting and accounting firms who want to plan their exit before they get pushed out at 60. Most are in their early 50s, at the peak of their earning power, yet mentally they have already left.” In Spain, as the labor pool shrinks and the deficit grows, the government has even begun “offering people up to $14,500 to work beyond the pension age of 66.” Persuading older workers “with the right skills” to stay on could prove as important as “trying to woo younger ones with heartfelt mission statements.”