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.”
– Kiplinger
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
place.“
Conclusion
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…
While only anecdotal, I have lots of friends who have commented about WFH being so much nicer and it giving them a taste to retire. I’ve also had lots of commenters of my blog say the same. As Kiplingers noted many are dreading the commute that comes with “back to normal”. I think miserable commutes are a major factor in workplace misery, often more than the job itself.
I would have loved to have been able to WFH, but my boss was a stickler about folks being in the office. Worse, it was a 1+ hour commute each way, in heavy Atlanta traffic. I think if I’d have tasted the luxury of WFH, then been forced back into that commute, it would have been sufficient for me to retire. Fortunate it’s not a decision I have to make.
Nailed it, Dave. When I switched from commuting to WFH, work barely felt like work. At times, I even felt like I was cheating. “They’re paying me to sit on my couch and peck away at my laptop? Suckers!”
I elected to retire at the end of August 2020 after almost six months of teaching analytics through Zoom. I had originally planned to retire in 2022, but the joy went out of teaching once it went online, particularly because students were reluctant to put their video on, so much of the time, I was teaching to a big black screen. I haven’t looked back. It was the right decision, especially given that on campus classes will likely not start again until Fall 2021 at the earliest.
D., you’re clearly not alone in the “rush”. I can’t imagine knowing you were teaching, but no one was watching. “The joy went out”, indeed! Glad to hear the decision has worked out well for you, thanks for stopping by.
I wish I could retire because I have had a similar experience. Alas, I am a few more years away from this prospect. I still love teaching and being a professor, but I have hated the online aspect of the past 9 months (soon to be 15 months b/c we will be totally online in the Spring 2021). I am looking forward to going back and seeing my students again.
Well I guess I’m one who was somewhat pushed into early retirement of 2020. Mine was a combination of the oil price crash and Covid, but still unexpected. Luckily I was prepared financially and mentally to retire and so far I have no regrets. Having my company keep my wife and I on the company health insurance plan is a big plus.
Again Fritz, I really appreciate your blog and look forward to it every week. I’m working towards reading all of them. Keep them coming!
“Luckily I was prepared financially and mentally to retire…”
It’s always better to be prepared and not need it than to need it and not be prepared. You’re fortunate to have snagged that company health insurance as part of your exit, well played. Thanks for your kind words about my writing, and good luck getting through that 5 year backlog of weekly posts! Much appreciated.
I just recently had heard that John had passed away, sad to hear he was a good guy! Makes the impact of my a bit earlier retirement even more valuable.
He was a good guy, indeed. We were lucky to know him. And, yes, it does bring home the blessing of having the ability to retire early, while we’re healthy enough to enjoy some great years of Freedom.
Covid brought my retirement forward by a year – a bit ironic considering how safe we are over here in Australia.
Working from home + feeling unsafe teaching in a pandemic = me realising that I could in fact retire whenever I liked without needing “one more year” and that I’ll never be bored.
Yesterday I taught my last ever English classes, while Friday will be the last Drama class. Then a week of meetings planning for next year, which I’ll quietly sit through.
Roll on Dec 18!!
One Week To Go!!
I feel like I’ve been on your journey with you, FDJ. Excited for you to cross The Starting Line, I suspect you’ll have a great transition with all of the planning you’ve done. Thanks for taking me along on the ride!
Fritz, first time poster here! So glad a ran across you on a recent podcast! I believe this is definitely TRUE based on my experience(s) this year. I consider myself a planner by nature, was seriously “planning” on retiring next year. I am one of a “dying breed” who spent a 40 year career with one company (a local utility company). However, like many, the company came out with a “voluntary severance”, that made it a no-brainer for me and a few of my co-workers. I appreciate the decision to make it voluntary so some could have “input” to the decision. I suspect mainly COVID driven, but also aging workforce provided an opportunity to reduce operating expenses. While many who are “close” but not close enough may choose to stay, I suspect many have chosen to retire earlier than planned.
LOVE your blog and I just begun to tap the resources and experience you share. Keep up the great work. I have shared it with several already and I have only been a “member” for a week!
First Time Poster!! Love it! 40 years with one company is impressive, Tom, hope they still had a pension plan in place for you? I, too, was in that dying breed and spent 33 years with one company (fortunately, with a pension). I was hoping for a “voluntary severance” during my last few years of work, but wasn’t as lucky as you were to land one. Nice to get that little kicker when you were already prepared to go. Thanks for joining “The Retirement Manifeso Club” and sharing my work with those who may benefit, happy to have you aboard.
So for me I am not sure if it was a push or a blessing….the company changed directions a few years ago and I was holding on to hit my number which was fast approaching. BUT I was also faced with the OMY syndrome….then the voluntary separation offer came and I was eligible for salary continuation for a year. It was the perfect thing to happen at the perfect time. I am early in…10/31 retirement date but so far it is wonderful. I am 50, uncertainty still looms large for the future, but I am optimistic and thanks to Retirement Manifesto I am very well prepared. Thank you Fritz!!
I’d vote for Blessing. Nothing beats retirement, and it sounds like the kick in the pants was exactly what you needed to get over the OMY hump. Congrats on scoring an extra year of salary!! Glad to hear my words helped in your preparation, look forward to hearing how your transition goes (at 6 weeks in, you’re likely still in the honeymoon, but starting to realize this is a permanent change. I really enjoyed experiencing that transition after 33 years in the workforce.)
I’ve made the decision to retire but it was driven more by my mother’s death from lung cancer than by COVID. I’ve been 100% WFH since returning to my old job part time 3 years ago. Now I just have no life left in me to devote to the job and will wind down my duties here and resign. I’m also sure that I am financially prepared, and my inheritance from Mom is just the icing on the cake.
Lynne, so sad over your comment. Glad to hear you’re putting the job behind you, it’s time to rediscover the “life left in you” (there’s plenty, trust me). Sorry about your Mom, it’s so tough losing our parents. Hang in there, life will never be the same, but it can still be Great. I suspect your Mom would want you to love life in retirement, I hope you’re able to achieve that in the coming years.
Fritz, I did retire in August 2020 but it was not because of Covid. I had already planned to retire before it happened. It did delay my retirement by about a month. So glad that I went ahead and retired! We are spending the winter in Southern Arizona in our RV and love it.
Congratulations on crossing The Starting Line and hitting the road. Sounds like a great way to start retirement, COVID be damned. Good for you for living life, enjoy your winter in AZ!
My wife and I turned 50 this year. Our plan is to work another four years, but we have been able to take advantage of a few things this year and could go now if we really wanted (or were forced) to do so. I am more likely to be asked to take furlough days next year (government worker) but neither of us will be forced out. Nor do I personally know anyone who has retired during the pandemic. I know a few people who have extended their work time by about 6 months. This has mainly been motivated by altruism – my co-workers know that if they retire during a hiring freeze it will make things worse for those of us left behind. My wife will be forced back into the office sometime next summer. I suspect I’ll be able to work from home 2 days per week until I retire. Management is much more open to working from home now, but a “management change” in two years could deeply impact that plan.
“I suspect I’ll be able to work from home 2 days per week until I retire.”
Lucky dog. Smiles.
Our timing was perfect. My wife and I retired last December. Our last transaction in Real Estate closed while we were in Bruges on December 14th. We had several trips planned for 2020 and were very excited to be free from the daily work grind. As we all know it did not turn our the way we planned and had to cancel all the trips. However, retirement was the best move we could make. Never been happier and more at peace, and always seem to have too much to do. That does not mean that we do not worry about finances and making things work month to month. We were fortunate to put away money and plan this out for a year ahead to see what it would cost us per month. Do I recommend it….Hell yes! There are moments when we do look back and think, hmmm, we could have gone a little longer and made a few more bucks, but those moments are fleeting and far between. I always say, “retirement is like having kids. If you want until you think you can afford it, you will never do it.”
Nothing better than perfect timing. Yours was not the only 2020 that didn’t “turn out the way we planned”, glad to hear it’s working out well for you regardless. “Never been happier”, no sweeter words could be written. Congrats on taking the plunge. Glad to have you in “the retirement pond”! The water sure is nice, right!?
Great article and thanks for doing all of the homework here. Very interesting indeed as was the “50 Essential Stats” data. By virtue of the comments above, it certainly appears to be a Retirement Rush. It will be interesting to see how this continues to play out in 2021.
“Maybe you’re just burned out from all of those stupid Zoom conference calls”
I’ve been 100% work-from-home since April and on another one of these Zoom calls right now. One way to avoid Zoom burn out is to read blogs like theretirementmanifesto during these meetings. Multitask, right?
Fritz,
I am retiring Dec 31! Had been thinking about it for awhile. I am soon to turn 61 but wasn’t ready in any sense. But WFH gave me a taste of what it would be like to be home all day, playing with the dog, taking a nap, etc., I couldn’t imagine going back to the office all day. BECAUSE I had been reading your blog, I felt I had some sense of what to expect and what to do. I can’t thank you enough for all your insight and wisdom and your readers. Thanks and move over, I’m jumping on board with all you folks who have blazed the trail already.
Congratulations, Lester. Great to hear from someone who decided to retire after experiencing the benefit of WFH. It pleases me to know that my words have been a benefit on your journey. Welcome aboard, happy to have you on board!
I won’t tell if you won’t. Wink.
Fritz, we’re are headed for retirement in 2022 and are contemplating a second career at 50. COVID-19 has taught me more about myself. One of those things is my desire to continue to work, but on my own terms, and not drive into work every day.
Fritz, so sorry to hear about your good friend John. I suspect he too had hoped for a long retirement. We never know what the future will hold, but preparing and leaving the rat race as early as possible will always improve the chances we can enjoy more of the time we have left. I left my crappy old job back in October 2019 at 56. Even though I wasn’t able to fulfill all of the year 1 plans, I’ve never once been board. In fact many days I’m annoyed I need to quit for the day and go to sleep. There is so much I want to learn and do everyday. Joel……
Thanks for your kind words, Joel. We never know what the future will hold, indeed.
Hey Fritz,
First – so sorry about your friend John… too many leaving too early (for a variety of reasons).
From a purely retirement perspective, COVID was probably a blessing for me (NOT for the havoc it is wreaked on out lives!!!!!). My Planner said we were financially ready as early as early 2017… a surgery for me and some extended family dynamics caused us to put it off until early 2020. I was honestly waffling on exactly when to go, mostly because I had “how much is enough” syndrome and I did still get a lot of satisfaction from my job, but was targeting April 1. Even prior to COVID, my company had been struggling and was talking both voluntary and involuntary layoffs. I half-volunteered and they unhesitatingly took me up on it – HA! June 5 was my birthday and my last day, exactly 3 weeks to the day shy of 42 years (why yes, I did start when I was 12 🙂 ). Honestly, had I known COVID was going to keep us so locked down I might have put off volunteering, but it has been wonderful getting lots of projects done around the house and not having any stress from work (though getting things straight with 401k rollovers, SS, Medicare, and Medicare supps, has caused its own – mostly minor in the scheme of things – stresses.
So COVID was a blessing because it more or less forced me into action rather than leaving me ‘hemming and hah-ing” about when to make a final decision to pull the trigger.
Sounds like a great birthday present! And, no worries, this COVID thing will soon be in our rear view mirrors and you’ll be able to get on with a great retirement.
I had planned to retire last year, but got hit with the OMY logic and a few health concerns that having company insure made easier. I was all planned to retire this year, stayed a bit longer than I expected to help the transition to my successor. It felt like the right time, so for me not a rush but a planned transition that just happened during a crazy time.
I will be happy when the vaccines are available and we are able to freely travel.
Pesky OMY, I can relate. Responsible of you to provide a smooth transition to your successor, I did the same. Just felt right to invest that extra bit of time to ensure nothing was lost in the transition. I suspect you’ll be happy soon, sounds like those vaccines are just around the corner…
Love your blog Fritz. I’ve been retired for a couple of months now. This was a little earlier than I planned, but only by a few months. I’m a 30 year government employee and so will get a pretty good pension. I had to take a bit of a penalty, but it’s been worth it. Covid was part of the reason. I would rather have the any risky decisions regarding my health in my own hands. Although, if I really loved my job, I probably could have hung in there for a few more months. Two other people on my team retired this year as well.
Michelle, thanks for weighing in as someone who joined the Mad Retirement Rush. I, too, left a bit of my pension on the table when I left at Age 55, but once I determined that I had “Enough”, I figured it wasn’t worth wasting a few more years at the desk. 2 1/2 years in, I have 0 regrets. I hope you find the same as your retirement evolves. Thanks for stopping by.
I retired in September from one of the largest hospital systems in the US. I actually prolonged my retirement date 6-7 months to help with the covid surge.
I’m fortunate to have a pension but since I’m only 57, I will not be taking it until 65 since it will go up 8%/yr.
Human resources said the back log for pension application was 4-5 months due to the record number of retirements.
Thank you for your work in the hospital system, definitely front line of 2020. A 4-5 month backlog is amazing. I suspected droves of health care professionals have retired this year, interesting to hear it was a “record number”. Enjoy your retirement, you’ve earned it!
I am currently in what I call “The Red Zone”, at age 53 with the majority of my savings in my 401K plan. As I have not found any way to access this without penalties prior to age 55, the next year and a few months seem critical to stay the course. Once I at least cross that age 55 milestone, it would seem like I would then have options to retire at anytime depending on my total savings and comfort level. It is interesting the number of comments from readers that have made that decision earlier than 55. As tempting as a severance package would be, I believe it would then take away the option of using the “Rule of 55”, if taken prior to the year in which one turns 55. If so, this would then push out the ability to access pre-tax dollars without penalty from 55 to age 59.5. I wonder if there are options or loopholes I’m not aware of to gain access to pre-tax dollars early, or if those readers just have more savings in aftertax accounts.
Tom, I’ve written several posts about “The Red Zone” (just search that phrase on my blog and you’ll find them). It’s an interesting period of time. I, like you, chose to work to Age 55 to trigger the “Rule of 55”. Fortunately, I’ve not had to exercise it (after-tax liquidity has turned out to be more than sufficient), but I felt the freedom to access my retirement funds would be valuable, and I’ve no regrets. I’m not aware of any loopholes, other than being able to withdraw contributions (but not earnings) from your ROTH after they’ve been in place for 5 years.
I’m always saddened when I hear of people passing as of late. I’m sorry for your loss.
I’ve know two people who we lost to the Sars-COV-2 virus, and several who continue to be very ill. All of which are unnecessary.
Anyway, the brain drain and lost skill sets of sudden retirements have lasting effects of those in our immediate circles. My dentist decided to retire and my tree guy. Both mentioned they did not want to deal with the general public that ignores science, common sense and common decency which could put them at risk. For us, there was a scramble to replace these lost resources that we depended on. The trickle down effect will be felt because the gap does get filled quickly with the level of service and quality that we are used too with replacements. Relationships take time.
I have my charter so another attempt at retirement is on hold until COVID ends up shot dead when 80% of the population rolls up their sleeves with four choices of vaccines. Two are in the bag, not that I’m counting.
Francis, it is always a bit of a shock when you lose “younger” friends, a good reminder to enjoy every day and count our blessings. Hoping you achieve your 80% charter trigger sooner rather than later!
Fritz,
I truly enjoy your blog and look forward to your posts. I/we have followed many blogs over the last several years of retirement planning and have used parts and pieces of each but more so for the insight provided in how to enjoy retirement, not just get there. You excel at that. I retired in September ’18 only to go back in Dec’18. Finally cemented a retirement on 1/31 of this year (at 64), my wife retired 1/1/14 . No Covid reason for me, just a plan finally coming to fruition. Covid has certainly trimmed our sails for travel and I am envious of your trip to Seattle as that is where my daughter lives with her husband and she is now pregnant with her first.
Have a good friend that retired earlier this year at 56. Covid helped push him as he said “What the H… is next?” time to play!
I appreciate the many reasons to regain control of our daily decisions, truly refreshing.
We chose to not be bored and finally bought that second house, a fixer upper to keep me busy, in the town just east of you. Love the mountains and the trees, a refreshing break from the heat and congestion of Florida. Looking forward to future posts on the post vaccine world of travel and adventure.
Thanks for the kind words, Kerry. Hoping you’re able to get to Seattle sooner rather than later, hopefully in time to witness the birth of your grandchild! Just East of me, eh? I’m thinkng Blairsville, perhaps? Would love to meet up for a coffee or lunch someday, lmk when you’re in the area.
When I first eyed this post I thought the idea of a mad retirement rush was farcical. Thanks for opening my eyes, my friend.
Sorry to wake you from your nap. Smiles.
I am truly sorry for the loss of your friend John. COVID an awful disease that has impacted so many people in so many ways. My condolences and warmest wishes.
I wasn’t “forced” to retire early but a generous Voluntary Retirement Incentive made it easier for me to retire this year instead of next year. The reason I wanted to comment is to say thank you, Fritz! My husband and I read “The Retirement Manifesto” back in early summer and I know that beginning to think and plan my retirement made this decision so much easier. So many of my coworkers were caught off guard and unprepared for this sudden retirement. My husband retired 2 years ago so we are now moving forward with some of our retirement plans! It’s a little scary and a little exciting all at the same time!
This is a really good research-based answer, Fritz! Layoffs, struggling businesses (baby boomers dominate business ownership), and reduced attraction of work all seem to be contributing to an unexpected start to retirement for many as a result of the COVID pandemic. Another measure is the rise in Social Security disability applications. And the increase in early Social Security claimants after the usual January 1 rush. One of our favorite experts, Teresa Ghalarducci, says to be ready to retire by 62, even if you plan on working longer. Why? It’s not always up to you. The economy, the boss, your health all have a say on ultimate timing. 2020 proves that.