What does the Covid-19 retirement rush mean?

Published on 14/06/2021

Traditionally, people have strongly believed that age is just a number and have been pushing past the retirement age to continue earning till they physically and mentally can remain active. This is primarily what led to establishing a retirement age at all! However, we now notice a deviance in trend for the first time. The number of people retiring has exponentially increased in the last year, led by the pandemic that caught us off-guard. More and more Americans are planning to expedite their retirement plans. A research report by the Pew Research Center explains how 3.2 million baby boomers retired in 2020 than the year before that. Compared to the years before this, there has been a 50% jump in the number of people retiring, especially amid a pandemic-like crisis.

The number of people who want to work post-retirement has also plummeted to 1.4 million- a record low in the country’s history. Meanwhile, over 2.7 million citizens over the age of 55 are mulling to apply for Social Security benefits before retirement age. 

There have been several reasons for people wanting to retire early- from the pandemic to unemployment, from financial circumstances to personal decisions. The bottom line is that more and more people are making the conscious choice of retiring earlier. 

While those retiring early are gleeful about it, the Social Security retirement trust fund is not. There is only so much that the fund can do without taking a hit. With the number of retirees growing, the Social Security Retirement trust fund may likely run out of money sooner than expected. And the Social Security trust fund running out of money is not pleasant news for millions of taxpayers across the country. This can lead to a crisis in Washington with politicians having no other go than to pump in an increased amount of money to the fund. 

This reversal in trend with many people retiring early is not bad news just for the Government and the Social Security fund. It may also impact those choosing to retire early. A simple decision like many people opting to retire early can lead to high demand for goods and services that retirees want to buy. For instance, property rates in traditional retirement neighborhoods will likely soar- prices have already seen a massive jump in the past year.

A key propellant in such a thing happening is a shortage of the workforce. On the contrary, older employees who are supposed to train newer employees and mentor people are quitting the ecosystem much earlier than anticipated. 

However, it is also true that many people inching closer to retirement lost their jobs to the pandemic and claimed social security benefits. When the situation improves and the economy recovers, these laid-off employees might be brought back to the workforce. 

As of now, the average retirement age seems to be decreasing with more people younger than 64 years opting for early retirement. This can not only have a detrimental impact on the economy but also on your retirement plans. Speak to our financial advisors to safeguard your second innings now at C19grants@mytaxfiler.com

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