There might be a Great Resignation going on in some parts of the American workforce, but other parts are witnessing a Great Unretirement. A recent report from the AARP, citing data from the Indeed employment website, found that 1.7 million Americans who retired a year earlier have returned to the workforce. That represents just more than 3% of overall retirees.
They’re not just going back to pad their bank accounts with fresh paychecks, either. Many are driven by other factors, ranging from stock market volatility to a desire for more social interaction. The majority are working part-time.
The U.S. inflation rate hit 8.3% in April, continuing a recent run that has seen prices surge to their highest levels since the early 1980s. At the same time, the Social Security Cost of Living Adjustment (COLA) for 2022 is only 5.9%, meaning that retirees who depend on Social Security for a good part of their income are fighting a losing battle against inflation.
This has convinced many retirees to head back to work.
“The purchasing power of retirement savings is eroding every single month,” Sinem Buber, lead economist at ZipRecruiter, told AARP. “This is quite new for them, and it’s scary.”
Stock Market Woes
The Dow has fallen about 10% so far in 2022 after spending much of the previous decade soaring to record highs. The S&P 500 has dipped even more this year. The result is that many retirees have seen their 401k balances decline just as prices have skyrocketed. In some cases, retirees have little option but to return to work.
“These people who are retired are the same people who lost a substantial share of their retirement savings back in 2008, and they barely recovered,” Buber said. “They have started recalling those bad memories and thinking, maybe I need to work for a couple of more years to recover what was lost.”
Rise in Remote Work
Perhaps the biggest impact the COVID-19 pandemic had on professional life is that it forced many companies to adapt to work-from-home arrangements during lockdowns. They turned to technologies like Zoom and Slack to make it easier for employees to work remotely. More than a few employees liked the arrangements — especially older workers who have grown tired of long and expensive commutes.
Even with the pandemic easing, many companies still offer remote and hybrid arrangements — a paradigm which has lured a large number of retirees back into the workforce.
Rising Health Costs
As of April, the cost of medical care services had risen 3.5% from the previous year, AARP noted. This has proven especially burdensome to retirees. According to Buber, the average cost of health care for older workers is about three times what it is for young working adults. Retirees who aren’t yet eligible for Medicare are returning to the workforce strictly for health care coverage.
Seniors tend to be more isolated than younger folks, and that reality only worsened during the pandemic. For retirees, returning to work provides a way to avoid loneliness.
“We have a real serious issue in this country of senior loneliness and depression. The pandemic really exacerbated that,” Andrew Meadows, senior vice president at Ubiquity Retirement + Savings, told AARP. “Many seniors were forced to stay at home, and now they are thinking of entering the workforce again for social interactions.”
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