“Retirement isn’t what it used to be.” – Nora Dowd Eisenhower, Philadelphia Mayor’s Commission on Aging
The rate of “unretirement,” measuring those who switch back to employment following retirement, has been accelerating, according to Nick Bunker, Head of Research at job-seeking site Indeed. The question is whether this is a healthy trend for America’s retirees.
Forty percent of workers 65 or older had previously retired at some point, according to a Rand Corporation report in 2019. About 10 million workers are in the age 65-or-older group, or 17.9 percent, according to the most recent statistics from the Bureau of Labor Statistics.
Retirees feeling the pinch of financial instability
A stark reality has hit many American retirees in the last two years as a variety of reasons have necessitated a move back to the workforce. Rent increases, raises in food prices, and longer life spans have led to many later-in-life financial health challenges for American consumers that require post-retirement job searches, especially in these last few months in 2021.
Back in October, the rate of unretirement was 2.6 percent, up from September’s 2.5, and August’s 2.4, according to data from the United States Census Bureau’s Current Population Survey. While Bunker’s analysis does not take into account the specific reasons for the rising unretirement rates, it does suggest pandemic job losses played a factor. Other experts, however, suggest it might be caused by financial distress among older Americans.
Tracey Gronniger, directing attorney for nonprofit Justice In Aging, claimed that many seniors who are not experiencing a lack of financial health “on paper” might be struggling behind the scenes, especially if they’re coming up short on health care or other essential services. “I think that older people are kind of forgotten sometimes,” she explains. “And some of them have to figure out how to use services they didn’t have to use before. And so that could be a drain on their income.”
A “drain on income” is exactly what many un-retirees are experiencing in 2021. The COVID pandemic did not necessarily deplete the value of financial assets the way the Great Recession did. Some workers had the necessary financial stability to retire. In many other cases, early or forced retirement can also permanently lower retirees’ standard of living. As those workers are shown the door, they may go into debt, draw on their savings, collect on their Social Security earlier, or end up paying for pre-Medicare health care.
Despite accessing their pensions and other financial resources after retirement, some workers’ savings will not be enough to last them 20, 30, or 40 years as the inevitable cost of living increases. Median rent increased 11.4 percent in 2021 compared to the 3.3 percent increase in 2017, 2018, and 2019. The United Nations Food Price Index, which tracks commodities and food pricing, increased 30 percent this fall. As Social Security Income will thankfully increase in 2022, unfortunately so will premiums stemming from Medicare Plan B, from $148.50 in 2021 to $170.10 in 2022.
For most low-income individuals, Supplementary Security Income and Social Security aren’t enough, assuming those individuals even have any sufficient savings to lean on. “There are people that retire, try that for a little while, but now the money is running out, and they’re looking at their retirement savings and there’s not enough there,” says Susan Weinstock, vice president of AARP’s financial resilience programming. “So folks need to go back to work just to make ends meet.”
Emma Aguila, Associate Professor at the USC Sol Price School of Public Policy, adds financial instability is especially high among low-income workers and individuals of color, particularly Black and Hispanics who, following retirement, may not have the room with just Social Security and savings. Additionally, she says landmark events in consumers’ lives, like purchasing a house or dealing with unexpected medical emergencies, may draw retirees back to the workforce.
Ultimately 91 percent, or 3.3 million people aged 55 or older, did not want to work or were out of the labor force as late as October 2021. Whether such individuals’ retirements are permanent or temporary is largely a determination of how they choose to spend their time, says Aaron Sojourner, labor economist and associate professor at the University of Minnesota.
With that in mind, would people in their 50s, 60s, or 70s or later rather spend their remaining years working, or consistently struggling to get by? For too many it appears, adds Sojourner, “The inside-the-labor-market option got better than the outside-the-labor-market option.”
How can credit unions help un-retirees?
Credit unions may have a significant opportunity to establish a deeper connection with this newer segment of the retired or soon-to-be un-retired population experiencing an uncertain future. Around 43 percent of credit union members have investable assets over $100,000, or cash-plus long-term investments, not including their home. However, only 2 percent of members take advantage of their credit union’s investment services.
It serves the credit union movement’s best interests to make financial mentorship or advice a core, marketable offering to their communities. Investment services are far too valuable to the member and your credit union’s brand if you leave it gathering dust. According to the Northwest Credit Union Association, most members have pretty consistent financial health needs throughout their lives – cash management, credit and loans, asset accumulation, future income generation, insurance, and leaving a legacy for future generations.
Ultimately, if you can establish and market your wealth management services as an essential offering – even if it’s a simple, accessible mobile life event loan program – your credit union can build even longer-lasting relationships with pre-retired, post-retired, or un-retired members that can give them a better path forward to financial health and wellness.