Did you know there is a “Mad Retirement Rush” underway?
I read it on the internet, so it has to be true.
Today, we’ll dig into the wave of recent retirements to see if there are any facts to back up the headline.Is there's a Mad Retirement Rush underway? Today, we look at the facts behind the headline. Click To Tweet
The Mad Retirement Rush of 2020
Kiplinger recently published “Why a Massive Retirement Rush is Underway“. It’s a catchy headline (imitation is the most sincere form of flattery, right?).
But is it true?
I’ll start with a review of the Kiplinger piece, then expand the discussion to include additional research I’ve done on the Mad Retirement Rush of 2020.
“Older workers in many fields are feeling the urge — or the push — to retire.”
One line from the Kiplinger article caught my attention: “If you were close to retirement anyway, you may be wondering if returning to work is really worth the hassle and the risk to your health.”
Kiplinger reports that there has been a “pandemic-prodded surge” in people contemplating early retirement, driven by people getting used to no longer having to commute and having the luxury of working in “athleisure” attire. Many of these near-retirees are dreading the return of the commute, the maddening battle with rush hour traffic, and the need to return to business attire.
In addition, Kiplinger cites “continued erosion of seniority-based advantages in the workplace and, while illegal, discrimination in hiring someone close to retirement age given the health risks and other concerns. As a result, since the pandemic began, 42% of older workers who lost their jobs say they’ve retired. Conversely, only 28% of older workers who became unemployed during the 2007-2008 recession said they had retired.”
They cite these reasons as being the driving force behind an estimated 4 million older Americans leaving the workforce by October.
In closing, Kiplinger cites an increase in near-retirees contacting financial planners to determine if they’re able to retire. If you’re in the group who is considering retirement, I encourage you to read my post from last week, How To Retire in 5 Simple Steps.
Working From Home And The Mad Retirement Rush
If you’ve been working from home for the past 8 months, you probably aren’t looking forward to resuming your commute. According to this article from Bloomberg published on Nov 25, “about half the workforce is still working from home”. Higher-income workers have an edge, with “more than 61% of households taking in more than $75,000 a year…able to substitute telecommuting for some in-person work, compared with about 21% of households earning less than $75,000.”
According to this Gallup poll, “nearly 2/3 of U.S. workers who have been working remotely during the pandemic would like to continue to do so.” The survey concludes that the work-from-home trend is starting to decline:
“A new 33% low say they are “always” working remotely, down from 51% in April amid the height of restrictions on businesses and schools. That 18-percentage-point shift has been offset by a seven-point uptick in the percentage who are now “sometimes” working remotely (from 18% to 25%) and a larger 11-point increase in the percentage “never”‘ working remotely (from 31% to 42%).” (Source: Gallup)
Those who have been enjoying your time working from home and are facing an employer’s “push” to re-appear in the office may be considering retirement, perhaps on a part-time basis. Maybe you’re just burned out from all of those stupid Zoom conference calls, and want to be done with it regardless of where and how you work.
Clearly, the working from home phenomenon has been a factor, though we’ll likely never really know it’s full impact on the Mad Retirement Rush of 2020.
Is There Factual Research To Confirm The Retirement Rush?
Intrigued by the Kiplinger article, I dug in and did some homework.
The best research-based report I was able to find on the trend was this article from Pew Research, published on 11/9/20. Their report is the most current I was able to find on the topic of the “Mad retirement rush”, and I like the fact that they backed up their article with data-based research, including the following chart:
The Pew Report concludes that there has, in fact, been an increase in retirements during the Mad Retirement Rush of 2020, citing an increase from the historical average rate of +2 Million retirements per year since 2011 to a rate of +3.2 million in the third quarter of 2020. As of September, a total of 28.6 million Baby Boomers reported they are out of the workforce due to retirement, or 40% of baby boomers vs. 39% in February.
Another article I found, 50 Essential Retirement Statistics for 2020, provides some fascinating statistics on the current state of retirement (note to self: perhaps worth a dedicated post?). As far as confirming the Mad Retirement Rush of 2020, the statistics weren’t much help since their focus doesn’t specifically address the retirement rush. Regardless, it’s a good article so I included it for any of you who are interested.
Forbes has also written on the topic with their article The Covid-19 Recession Is Forcing A Wave Of Early Retirements, which includes some research they’ve conducted on the topic. The article includes the following graphic, which illustrates that more older workers are being pushed out of the workforce during the Covid epidemic than during previous recessions:
Also relevant from that Forbes article is the following quote:
“Of even more concern is the historically high share of older workers who left the labor market since March and now tell government surveyors they are retired. In the early months of the Great Recession (late 2007 and early 2008), 28% of the older workers who had just lost their jobs said they were retired. In the Covid-19 recession, 42% of the newly unemployed older workers say they are retired.”
As my research continued, I came across a study from the Becker Friedman Institute titled Labor Markets During The COVID-19 Crisis: A Preliminary View dated April 11, 2020. While a bit early in the crisis, the report’s conclusion is relevant to our discussion here (emphasis added by me):
“It is still very early on in the covid-19 crisis, but preliminary indicators point toward catastrophic declines in
employment. Our surveys provide additional evidence on this decline in employment, pointing to a 20 million
decline in the number of employed workers. Most strikingly, we find a much less than proportional increase in
unemployment, indicating that most of these newly unemployed workers are not looking for new work. Hopefully
this reflects a transitory characteristic as these individuals face shelters-at-home and few work opportunities. But
the wave of early retirements that we document suggests that more permanent changes may already be taking
So, is the Mad Retirement Rush of 2020 reality or myth?
The facts outlined by the Pew Research Center were the most relevant, citing a statistically significant increase of 1 million additional Baby Boomer retirements in 2020 versus the prior 9 years. While some increase could be attributed to the aging demographic of Baby Boomers, I suspect the significant increase of + 1MM retirees is impacted by the COVID epidemic.
Try to visualize 1 million people.
I see football stadium after football stadium full of people, one million of them all heading for the exit at the same time. It certainly seems like a legitimate retirement rush to me. I feel for those who have been forced into retirement when they weren’t ready, perhaps an under-reported casualty of the horrific COVID crisis.
It’s been a tough year for many people around the world, and my heart goes out to those who have lost loved ones (I lost a friend a few weeks ago. Your family is in my prayers, John, and I’ve included your photo below as a memorial of our friendship).
If you lost your job as a result of the crisis, my thoughts and prayers are with you. I may write a future post with my thoughts on how to deal with being forced into a retirement you weren’t ready for. As I’ve written before in Will You Be Forced To Retire Early?, the reality is that 60% of Americans are forced to retire earlier than planned. I suspect that number is even higher this year.
Your Turn: If you entered retirement in 2020, I’d like to hear from you. Was your decision influenced by COVID? Were you forced into retirement? What are you struggling with as a result? What advice would you give others in your situation? Let’s chat…