I can, I will, I can’t, I won’t. Those are all responses we’ve heard in the past two years about deciding to retire. The response you give or the response you get is directly related to the U.S. economy.
Before COVID, American workers age 55 and above were retiring at a rate of approximately one million per year. But then, COVID hit and the face of retirement changed. People saw doom and gloom. They were afraid the economy and the stock market were moving against them, so they opted to retire and take whatever guaranteed money they could get from Social Security and a pension, if they had one available. Retirements jumped to 3.5 million in 2021. According to the Bureau of Labor Statistics, the number of retirees in the U.S. jumped from 28.3 million in February 2020 to 31.6 million in October 2021.
But inflation changed all that. Inflation went from 1.94% in January 2021 to 6.3% by the end of October 2021. Medicare premiums went up 14.5%. The higher cost of living created hardships for many retirees, especially those living on fixed incomes, and the face of retirement changed again. By March 2022 more than one million people who were retired the previous year had gone back to work and Unretirement began.
And now the face of retiring has changed yet again. Inflation continued to rise to 8.2% in September 2022, a level not seen in more than 40 years and it’s doused a large percentage of U.S. workers with pessimism, changing the face of retiring to, “I have to delay retiring.”
In the latest Nationwide Retirement Institute survey, 40% of American workers ages 45 and older with access to a 401(k) plan are delaying retirement. That’s twice as many who said the same thing in 2021. 24% of employees say they’re on the wrong track for retirement, and the number of workers with a positive outlook about their retirement plan and financial investments dropped from 74% in 2021 to 58% in 2022. The survey found:
- 73% plan to delay retirement because they’re concerned about having enough retirement savings.
- 47% said recent market volatility shrunk their savings.
- 44% listed a future market crash as the reason they plan to work longer.
- 43% said it was because they can’t live the way they want in retirement.
- 42% are delaying retirement because they’re saving less due to inflation.
- 21% because they’ve withdrawn a lot of savings due to inflation.
- 12% because they’re supporting a relative or friend due to inflation.
- 11% because of expensive health-related costs
On average, respondents plan to work four years longer than they initially planned.
The Nationwide survey also talked to employers, who said delaying retirement harmed the well-being of their employees.
- 30% reported lower team morale.
- 29% reported adverse effects on their employees’ mental health.
- 27% noticed lower workforce productivity
- 22% reported negative effects on the physical health of their employees.
Amelia Dunlap, vice president of Nationwide Retirement Solutions marketing said, “Employers may find themselves with a workforce that lacks motivation to go above and beyond without the ability to reward employees for a job well done.” She went on to say that delayed retirements may “unintentionally contribute to quiet quitting,” a recent trend that refers to employees doing the bare minimum at work instead of going above and beyond for their employer.
There’s a great quote from John D. Rockefeller, founder of the Standard Oil Company and one of the world’s richest people in his day. He was once asked, “How much is enough?” He responded, “Just a little bit more.”
So, with pandemics, bear markets, inflation and more month left at the end of their money, many people considering retirement may have taken Rockefeller’s wisdom to heart. They’ll delay retirement to make sure they have, “Just a little bit more.”