2021 has been called the Great Resignation as Americans chose to leave their jobs in record numbers in response to the COVID-19 pandemic that started a year earlier. But is the Great Resignation sustainable for retirees?
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To give you some background, in the 20 years prior to 2021, the U.S. resignation rate never exceeded 2.4% of the total workforce in a given month.
However, from March 2021 to December 2021, the resignation rate exceeded 2.4% every month, and it reached as high as 3% of the total workforce in September and November.
In November of 2021, the U.S Bureau of Labor Statistics reported a record 4.5 million resignations. To give that some context, in the 5 years prior to 2020, the average monthly resignations were under 3.2 million per month.
That’s not to say that all those people completely left the workforce. Hiring was also going on throughout this time. Many people quit their jobs to find different jobs with better pay and benefits or better schedules.
But many people also left the workforce completely, at least temporarily.
- Some chose early retirement.
- Some dual-income families chose to become single-income families to support their kids with e-learning and quarantine-related absences.
- Vaccine mandates also played a role.
The pandemic brought about more reflecting on what’s important. For many people, their job wasn’t at the top of the list.
Surveys show some of the highest stress levels and quit rates come from some of our most needed workers, including teachers, doctors, nurses, and police officers.
Even before the pandemic, the number of doctors leaving the workforce due to retirement was cause for concern for a health care crisis.
Since our audience is primarily retirees and pre-retirees, I want to focus more on the retirement numbers.
Between 2008 and 2019, the number of retirees increased by about 1 million per year.
However, in the past two years, the number of retirees has jumped by 3.5 million.
When comparing the 3rd quarter of 2021 to the 3rd quarter of 2019 (before the pandemic), retirement among Americans aged 55 and over increased by more than 2% from 48.1% to 50.3%.
This is noteworthy because, prior to the pandemic, this age group was the only working age group since 2000 to increase its labor force participation.
The age groups of 16 to 24 and 25 to 54 both decreased in labor force participation during that same time.
The Great Resignation is not surprising, but for many Americans, it’s also not sustainable.
The pandemic environment has led more Americans to retire, but the economic environment during the pandemic was temporary.
The federal stimulus programs were temporary.
Also temporary was the period of low inflation, rising home values, and rising stock prices that led to high 401(k) accounts and thoughts of retirement.
And our longevity is longer than ever!
Many will soon discover they don’t have the financial resources to stay unemployed.
Some retirees will return to work out of financial need. Others will return to work out of boredom and to seek fulfillment.
Labor force projections suggest the increase in retirement will be temporary.
The Bureau of Labor Statistics “projects large increases in labor force participation among older adults from 2020 to 2030, with nearly 40% of 65- to 69-year-olds being in the labor force by 2030, up from 33% in 2020.”
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