Take This Job, I’m Retiring – Kiplinger’s Personal Finance

Financial Planning

The pandemic and bull market have led to an increase in the number of workers who are retiring. You might call it the Gray Resignation.

Perhaps you have heard by now about the Great Resignation, the term coined to describe the mass exodus of workers who have left their jobs in recent months. Employers are scrambling to retain their employees or attract new ones, and in the service industry, “Help Wanted” signs, with promises of bonuses and other perks, are as ubiquitous as hand sanitizer.

Although many workers have switched to jobs offering better pay and benefits, some who have left a job may never return to work, thanks to a secondary trend that could be characterized as the Gray Resignation. In the third quarter of 2021, 50.3% of adults older than age 55 were retired, up from 48.1% in 2019, according to an analysis by the Pew Research Center. Nearly 67% of adults between age 65 and 74 were retired in the third quarter, up from 64% during the same period in 2019.

This trend is a reversal of the shift that occurred during the Great Re­cession of 2008–09, when the rate of retirement fell. Many retirees saw their investment portfolios decline sharply during that period, which may have compelled them to work longer in an effort to recover their losses. By contrast, millions of investors saw the value of their portfolios soar during the past two years. Home values have also skyrocketed, contributing to seniors’ worth. “Asset prices have done very well, so it has made it more feasible for older workers with assets to retire,” says Stephanie Aaronson, director of the economic studies program at the Brookings Institution.

Other factors related to the COVID-19 pandemic also may have influenced older workers’ decisions to retire. Some who left the workforce during the pandemic because of health concerns have declined to return, Aaronson says. And there are also nonfinancial issues at play, says Liz Windisch, a certified financial planner with Aspen Wealth Management in Denver. “This pandemic has really made people reevaluate their priorities on what they want their life to look like,” she says. “Killing yourself at work may not be worth it.”

Focus on finances. But financial planners are concerned that some older adults who are calling it quits aren’t financially prepared to retire. “I think that the market has been up for so long that some of us have forgotten it’s not always like that,” Windisch says. “While people’s portfolios and home values may have grown, you still need to make your money last 30 or 40 years.”

Of particular concern is what could happen to retirees if the stock market declines sharply soon after they leave the workforce—a real possibility at a time when stock market valuations are at record highs, says Andy Baxley, a CFP with The Planning Center in Chicago. “If, in the first two or three years of retirement, you see flat or negative investment returns, that matters a lot more than if you see it halfway through retirement,” he says.

Don’t forget to take the cost of health care into consideration before you turn in your security badge. If you retire before age 65, you’ll need to purchase your own health insurance, which can be pricey, even if you buy a plan from your state’s health care exchange. And even after you’re eligible for Medicare, you’ll need to pay for Part B premiums and other out-of-pocket costs, which continue to rise. In addition, paying for long-term care later in life could cost you $200,000 or more, Baxley says.

Working just a few more years, or even months, can make a big difference to your financial security. It will reduce the amount of time in retirement you’ll need to finance with savings and allow you to continue contributing to your nest egg, while giving that money more time to grow. In addition, you can postpone filing for Social Security benefits, increasing the amount of your payouts.

Help really wanted. The good news is that retirees who decide to change jobs or return to the workforce will probably find a receptive job market. “If workers remain scarce, on balance that could encourage employers to try to attract older workers,” Aaronson says. In addition, older workers may have more flexibility to work on their own terms, says Tim Driver, founder of RetirementJobs.com. The pandemic showed that employees can work effectively from home, which means workers who want to work remotely will likely find employers are much more open to the idea, he says.

Driver adds that the number of companies designated as Certified Age Friendly Employers by the the Age Friendly Institute is rapidly increasing, encompassing a wide range of industries. 

Grahic illustration showing numbers of people who retired in 2019 and 2021

Pew Research Center

Your Guide to Roth Conversions

roth ira vs regular iraSpecial Report

Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report

February 25, 2021

5 Stocks to Sell for 2022

stocks to sell kpfm 2022

stocks to sell

5 Stocks to Sell for 2022

Sometimes, even good companies make for less-than-desirable investments. These five stocks look like Sells heading into 2022.

December 7, 2021

Hedge Funds’ 25 Top Blue-Chip Stocks to Buy Now

blue chips

blue chip stocks

Hedge Funds’ 25 Top Blue-Chip Stocks to Buy Now

What is the “smart money” up to lately? We explore the 25 most popular blue-chip stocks among the hedge fund crowd.

December 6, 2021

Find the Right Robo Adviser for You

Robo Opener KPFM

Financial Planning

Find the Right Robo Adviser for You

Investors can choose from an array of price points and investment offerings, and most services even offer a human touch.

December 24, 2021

Santa’s End-of-the-Year Finance Tips 2021

brandon copeland end of year financial tips 2021

Brandon Copeland

Santa’s End-of-the-Year Finance Tips 2021

Atlanta Falcons linebacker and Kiplinger contributing editor Brandon Copeland shares a few ways you can improve your finances before 2022 gets here.

December 23, 2021

2 Clever Ways to Gift Your Home to Your Kids

KRR gifting a home

buying a home

2 Clever Ways to Gift Your Home to Your Kids

Be sure to consider the taxes you’ll owe if you want to give the family home to an adult child.

December 23, 2021

2021 Is Almost Over – But There’s Still Time for 5 Last-Minute Financial Moves

PresentRun

Financial Planning

2021 Is Almost Over – But There’s Still Time for 5 Last-Minute Financial Moves

With the hustle and bustle of the holidays, it’s easy for any working professional to set aside their personal financial plans. But taking a few minut…

December 23, 2021