Retirement Post Covid-19 Looks Different

Financial Wellness ProgramRetirement post covid-19 is not the same as it once was.  As more Baby Boomers get ready to retire in the coming year, there are some prevailing trends that may impact their ability to retire.  The pandemic has changed what retirement today actually looks like.  According to a recent article published by online home seller Sundae, there are many changes.  Following are some of the trends that retirees and near-retirees may need to consider.  Preparing to leave the workforce and embark on the next chapter is a developing process.

First, health and finances may have a significant impact on Baby Boomers’ decision to retire. The Covid-19 pandemic prompted many workers, particularly those in older generations, to leave the workforce early.  “Forced retirement” became an issue in specific industries or occupations, for example, in high-touch, human-contact jobs like in the hospitality and service industries.  In addition, workers lacking college degrees, women, and those unable to work remotely also left the workforce earlier than they might have due to the pandemic.  When it comes to retirement, doing so early is generally an appealing concept.  However, retirement post covid-19 may be less so these days with travel and gatherings continuing to be risky due to the proliferation of new variants.

Finances are also a concern.  Boomers who exhaust benefits or savings may find retirement post covid-19 a difficult position – having to tap their retirement assets early.  Taking money from 401(k)s and individual retirement accounts (IRAs) before age 59 1/2 often comes with early withdrawal penalties, not to mention hefty taxes.  In addition, retirees who are forced to collect Social Security benefits before their full retirement age of 67 may receive much smaller paychecks than they might have otherwise.

Pre-pandemic, the prevailing advice would have been for near-retirees to consider whether or not they could retire and perhaps make a Plan B.  However, when it’s a matter of health, the rules change.  Nonetheless, while older employees left the workforce en masse during the pandemic, the rate of Social Security claims stayed constant for workers age 55 and older between April 2019 and June 2021.  That may demonstrate that those workers intend to return to the workforce once the pandemic ends – good news for part-time job-seekers down the road.  They will need higher Social Security benefits in the future, and times of high inflation usually mean pay increases to help workers sustain a dignified quality of life.

According to Sundae, another potential conundrum facing retirement post covid-19 involves the choice to be renters or homeowners.  Both come with benefits and drawbacks, and in the end, it truly depends on a retiree’s personal preferences and their lifestyle. While renting eliminates upkeep and unpredictable expenses such as home maintenance and property tax hikes, homeownership may provide more stability and financial freedom.  A retired homeowner, for example, might rent out a room in their house for extra income.  They can also lock in a fixed interest rate on their mortgage, making the payments predictable for a longer period of time.  Against a backdrop of rising inflation and supply chain shortages, more retirees are opting for homeownership.  In fact, 82% of people age 75 and over own their homes, according to census.gov data quoted by Sundae.  Retirees also need to be aware of the tax implications, proximity to family, and weather concerns when deciding if and where to move or downsize in their post-career years.

These trends are important for employers to keep in mind as they help older employees manage through the resulting challenges so they can retire on time and with dignity.  The Covid-19 pandemic irrevocably changed the way we live and work.  It appears it has also changed the way we retire.

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