Many Pandemic Retirees Weren’t Ready. How to Cope if You’re One of Them.
Andrea Jones had yet to set a date to retire from her customer service job at United Airlines when Newark Airport began to look like a ghost town in March 2020. After 28 years with the carrier, she loved it. still his job. But at the end of that month, she had hung up her blue uniform for the last time. She still struggles with a sense of loss.
“I was not at all ready to leave,” she said. “It hit me right between the eyes.”
Ms Jones, 68, of East Windsor, NJ, has retired to protect the health of her husband, George, who suffers from multiple myeloma, a form of cancer. Fortunately, the Joneses had a nest egg and United offered a retirement package that allowed them to keep their health insurance.
Patricia Scott was not that lucky. Ms Scott, a special education teacher in Stockton, Calif., Retired in January to preserve her own health. 10-year-old grandmother, she survived breast cancer in 2016; her oncologist told her she couldn’t risk catching Covid-19 by going back to class. Today, at 66, she is in financial quicksand. “My income is half of what it was,” she said. She is single and in debt. “I am stressed, I am depressed and I am terrified.
For many of the nearly three million workers aged 55 to 70 who have left their jobs since March 2020, retirement during the pandemic has inflicted two traumas. Like Ms Jones and Ms Scott, most felt they were forced to quit their jobs before they wanted to leave, said Teresa Ghilarducci, professor of economics and political analysis at the New School for Social Research. Among that subset, the majority, like Ms Scott, were not financially prepared, Ms Ghilarducci said.
Many more older workers retired during the pandemic than during other recessions, according to New School research. After the 2008 financial crisis, for example, 1.9 million older workers left the labor market in the first three months of the recession. That’s 35% less than the number who left in the first three months of the pandemic. The latest data shows 1.7 million of the new wave of retirees have left despite financial uncertainty, Ms Ghilarducci said.
Their departures were generally not an offer for a few more years of birding. “A lot of people have been kicked out of their jobs,” Ms. Ghilarducci said; she attributed this surge in part to age discrimination. “Previously, employers let those they just hire go first in a recession, but this time the older people who hold their jobs the longest have been hit the hardest.”
Lack of enforcement of anti-discrimination laws was a factor, she said. So did what some employers saw as a rare opportunity created by the pandemic to get rid of older workers, who are seen as less productive and more expensive.
Whatever the reason, the new army of reluctant retirees, disproportionately made up of black workers and those without a college degree, according to June data from the New School, is in trouble. One main reason: Debt ratios among Americans 65 and older are the highest they have ever been, Ms. Ghilarducci said. And they are likely to increase as more people are forced to dip into their assets to make ends meet. Receiving Social Security earlier than expected will increase their vulnerability, as an earlier claim will definitely reduce their benefits.
Even for people with a financial safety net, the barriers can be significant. “There’s a lot of stress about being forced into retirement,” said Malcolm Etheridge, a financial advisor in Washington who has several elderly clients who are newly unemployed. “It takes time to overcome the disruption. “
For some, Etheridge found, a part-time job can bring back a sense of balance. For others, the road ahead is not as bleak as it seems. “A lot of people have the ambition to retire at a certain age, with a certain amount of money, but they have no idea that they might be able to adjust those goals.” One of his clients, kicked out of a software engineer job at Verizon after 27 years, was surprised to learn he could have retired comfortably two years ago.
Clients who suddenly have free time sometimes risk too much of their savings for Mr. Etheridge’s liking, especially as new entrepreneurs. He said he has seen more entrepreneurs of color starting businesses since the start of the pandemic. “It’s important that they take action to own their future, but some are spending their retirement to get started,” he said. “They have to make sure that the money still goes in the retirement bucket.”
Adding to retirement savings after a job loss is unlikely to be possible for the nearly 20% of low-income workers over 50 who thought they had no choice but to take their job. retirement, said Ghilarducci: “They will only have social security. on whom to rely, and they will be poor. Ms Scott, the teacher, did not fall into this category because she has a pension, but it is also difficult for her to supplement the pension basket.
While the early retirement incentive program she agreed to from her school district in January has kept her afloat, the monthly $ 426 student loan payment she deferred will catch up with her in January. “I think of that number, $ 426, at least five times a day,” she said. When she resumes her payments, she will no longer be able to pay her rent. “I don’t know what I’m going to do. I’m going to have to move in with a parent and be a burden.
Jovan Johnson, a certified financial planner in Atlanta, said Ms Scott and others in her situation should start looking for a volunteer financial advisor who can help make sense of their money. “Many of us help people for free during a crisis,” he said. He recommends looking for sites like the XY Planning Network.
The main benefit of sitting with a professional can be panic relief, he said. But the 15 new retirees who have contacted him for pro bono help since the start of the pandemic, including nurses and teachers, also have a better understanding of how to handle limited funds. “Everyone deserves to have a plan,” he said.
One way to gain control is to have a grip on the money. Dealing with the emotional fallout may not be so easy. Ms Scott’s loss of identity as a teacher, she said, was as much to blame for her depression as the financial pressure. “I was able to spend six hours a day, five days a week with kids who really needed me, and to be honest I was good at it,” she said. “Leaving them in the middle of a school year was like losing my own children.”
For Janice Sands, 71, who retired in March from the Manhattan Pen and Brush arts organization after 23 years as executive director, the stress started last year, when she contracted Covid-19. and spent several weeks in an intensive care unit. She wasn’t psychologically ready to retire, but because she hasn’t fully recovered yet, she felt she had to. “I was one of those people who was going to have to get out of there, I liked it so much,” she said.
Now she is adjusting to what she said was a more limited routine. Sunday evenings and Mondays disturb her the most. “It’s like when you dream of having a final exam and you’ve never been to class, or you forget your locker combination. I keep thinking, I have to go to work. Instead, she walks with her husband, Wallace Munro, a retired actor, and visits the grocery store more than she thinks.
“It’s something to do,” she said. “You have to restructure your life when something like this happens to you. It’s so easy to be depressed.
Manage your money in the event of sudden retirement
Mr Johnson, the financial planner, offered advice on juggling your income and expenses when you’re plunged into unemployment without warning.
Make sure you don’t have any old pension or 401 (k) money from previous employers. People who have renewed the retirement accounts of former employers often forget them.
Don’t feel guilty for taking Social Security early, especially if you have no other choice. You can start claiming your benefits from the age of 62. However, the downside of claiming before your full retirement age (you can see it on the Social Security website) is that your total monthly payments will be permanently reduced. If your income is below a certain threshold, your full Social Security payments may be exempt from tax.
Use Social Security payments for your fixed, non-discretionary expenses and your retirement assets for discretionary expenses, such as travel and entertainment.
Close the gap with Medicare, as the eligibility age is 65. Consider plans under the Affordable Care Act. Generally, if your income is low enough, you can receive premium tax credits and other benefits if you choose a plan in the market.
If Social Security and retirement savings can’t support your lifestyle, it’s time to consider Medicaid, Supplemental Income Security, and similar programs.
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