Over the past few months, it seems as if we have dove into every possible group of established workers. First, we discussed the entirety of how (and why) to attract Generation Z candidates to your open positions. Then, we discussed the need and possibility of a 4-day work week which, inexplicably, ended up becoming a deep plunge into the needs and wants of current millennial workers. But the trifecta must eventually be discussed. Right? If we discuss the young and middle, we must eventually touch on the workers that have been around for a while. Luckily, something is trending that way: unretirement.
In a way, we are a bit late to the party. Unretirement was a trend that started back toward the end of the pandemic. Have faith, though. We are always on time.
Staffing and hiring are in a strange place. Unemployment is way down, layoffs are way high, and available jobs are on the rise. Even the most seasoned HR representatives are at a loss for what’s to come (especially with an economy teetering on the edge of a plummet into recession). In a way, the economy is even more volatile than it was during the height of the pandemic.
The question becomes: does the unretirement trend continue into the new year? Are we seeing a future in which retirement just isn’t possible?
What Is Unretirement
Let’s be frank: the term unretirement speaks for itself. It’s the act of coming out of retirement. Furthermore, it happens more often than you’d imagine. On average, 10,000 baby boomers reach the average retirement age every day and around 2 million workers retire each year in the U.S. Despite such high numbers, it’s not uncommon to see people come out of retirement due to boredom or the pressing nature of modern living expenses (we’ll get to that later).
Though coming out of retirement happens every year, we are speaking about a trend that started during the COVID-19 pandemic.
Overall, unretirement is the act of coming out of retirement due to pandemic-related changes in both living costs and employment circumstances.
Ultimately, the pandemic was more than just a resetting point for culture. It was a renaissance for the working world, one that is still being felt to the current day. We will see the impact of the pandemic on employers and employees for years (and years) to come. We saw the Great Resignation where employees found a new sense of purpose and gained the power to make demands. Then, saw quiet quitting where employees began giving up at work but remaining there to survive the economy. Finally, we saw frugality where people began to budget their lives so they could work less.
The pandemic caused a lot of employee trends. Unretirement was one of them.
According to the Washington Post, 2.4 million people decided to retire at the beginning of the pandemic. They saw the trajectory of the world and the uncertainty of more than 8 million layoffs coming from the pandemic and decided it was time to step away from the working world. We were watching something unprecedented occur. If you could afford to retire (and were of the right age), it made perfect sense.
A few months into the pandemic, we saw 1.5 of the aforementioned 2.4 million retired workers return to the workforce. That’s unretirement.
Why Did It Happen?
It’s a little bit of this and a little bit of that.
According to the 2022 All-America Economic Survey by CNBC, older workers in the United States left work for a few different reasons. Overall, around 33% said they left to take care of their health, 20% said they did not want to work anymore, and 12% had to care for a family member. And in a world where health was at the forefront, this makes sense.
Let’s break down a more grim statistic: Baby Boomers are the current generation within retirement range. Born between 1946 and 1964, Boomers are currently between the ages of 56 to 74. The minimum age for full retirement, set by the Social Security Act of 1935, is 65 years old. Therefore, when we speak of those retiring and unretiring, we are speaking of Boomers.
According to the CDC, around 80% of COVID deaths are among boomers. Therefore, 80% of over 1 million deaths from the pandemic were in the retirement age range. So, there’s absolutely no shame for workers of the age range wanting to get out of the public sphere and stay at home by any means necessary.
At the end of the day, we were going to see a significant amount of workers retire during the pandemic years regardless. The health risks related to COVID fast-tracked the decision. Many on the cusp of retirement decided to pull the trigger due to the uncertainty and terror going on in the economy at the time.
But… It Didn’t Last
That same CNBC survey found that nearly 70% of respondents, who had retired, said they would consider a job under the right circumstances. The most common criteria for considering a return to the workforce were flexible hours, pay, and work-life balance. They also noted the need for part-time work instead of a full 40-hour workweek.
Why are so many considering unretirement? Well, the current world is hard.
According to CNBC, the average American retiree receives $1,666 in Social Security benefits per month. The average American household spends $5,111 each month. If you are finding these numbers don’t equate (or even fall within the same ballpark), you would be absolutely correct. Inflation is making it difficult to stay unemployed.
On top of needing more money, employees are also being lured in by companies hungry for labor. With the Great Resignation shifting the dynamic of power from employer to employee, companies had to begin offering greater benefits and incentives to entice workers. These bonuses got the attention of those already retired and thinking about another income, too.
Nick Bunker, economic research director for North America at Indeed, told CNBC, “The unretirement trend is emblematic of what we’re seeing in the labor market overall, which is seeing increasing labor force participation for a broad swath of workers.”
He went on to note, “Employers are taking steps to entice people. There’s an elevated share of postings that mention terms like hiring bonuses, retention bonuses. There are signs that employers are starting to lure people in with bonuses like that.”
Is It Really the Money?
Bunker went on to note that he was skeptical that inflation and living costs were the main reason for the unretirement. He noted the increase of workers coming out of retirement after the 2008 recession, despite inflation being nowhere near what it is now. Seemingly, people want to return to work to bust boredom and help the needy labor market.
For example, the CNBC article went on to speak to Tommy Benz, a retired executive who decided to pick up substitute teaching to both stay busy and help his former school.
“While subbing was not something I aspired to do in retirement, it was always in the back of my mind,” Benz said. “When I learned of the shortage they were facing, it became an easy decision.”
Labor participation rates were at a historic low in 2020, dipping to around 60%. Once pandemic conditions calmed down, businesses were scrambling to find help. Many small businesses were facing shutdowns, not because of loss of profit during the pandemic, but because they couldn’t stay staffed. Retired workers came out to help a country in need of labor.
While more money is always a great guess, it seems like unretirement was mostly caused by a country in need and a retired group fighting for something to do.
Will Unretirement Continue?
Ultimately, it’s impossible to say. With the strange shifting in workplace tides, anything is possible in the future. It’s entirely possible that unretirement picks up, for all we know.
If we are going off of the theorized reasoning behind the recent trend, then signs point toward a decline in unretirement. In fact, the concept of it being a trend may fall to the wayside by the end of the year.
Think of it this way: if we are placing the title of the trend upon workers that retired during COVID and came back due to recent job incentives and the need for labor, then the trend is probably over as of now. Those that retired during COVID have likely already made their decision to stay or leave the comfort of their homes (it has been 3 years, after all).
The All-American Workforce survey found that 62% of retirees said they left earlier than planned. 67% said they left at least two years earlier than they expected. That large percentage of retirees would have likely made their decision to return by now, 3 years after the main event and reasoning.
Secondly, the need for labor is no longer significant. The labor participation rate reached back up to the normalcy of 62.3% in December. While it isn’t at its normal average of 63%, it’s close. Schools and other low-market jobs are no longer scrambling for people to help out.
“I was working part time and my employer laid me off due to pandemic and restructuring. I would have worked part time longer if that option was available.”
— A woman told CNBC in regard to why she retired during COVID.
Job Incentives Aren’t As High
The final main reason for unretirement was the benefits jobs were offering workers during the hunt for new employees. Unfortunately, that once-striking power dynamic of employees and employers is starting to shift back to hiring businesses. The days of workers being able to demand such high incentives may be on their way out.
“Around the world, we’re seeing hiring slow and companies freeze recruitment due to economic uncertainty, with business leaders under intense pressure to manage costs and boost productivity,” Josh Graff, managing director for the EMEA and LATAM regions at LinkedIn, told CNBC Make It.
“Where the pandemic led to a shift towards flexible working and initiatives to support employees, the balance of power is now shifting back to employers,” he added.
Frankly, companies began overhiring after the pandemic cooled, filling the workforce with too many incentivized contracts and workers. The tech industry further proves this point.
In 2022, over 964 tech companies laid off over 149,876 workers globally. Though the numbers may seem skewed, surrounding an industry with millions of workers and thousands of companies, the significance is as crucial as you could possibly imagine. So critical, in fact, that WRAL Tech Wire has created an entire list for ‘Layoff Watch’ this year.
Therefore…
If enough time has passed for retirees to reevaluate their decision, worker incentives aren’t as high as they were, and labor isn’t as needed, then the main reasons pushing along the unretirement trend is over.
While inflation and the decrease in retirement payments will certainly still cause many retirees to take up a job, the main tidal wave of unretirement is over.
What About Future Generations?
If the cost of living continues to skyrocket, the idea of retirement will continue to spiral downward into an abyss of the American Dream past. Once upon a time, the American Dream was owning a piece of land and building a home. In 2023, that is almost impossible for those that have not already inherited plots from the aforementioned fathers. Retirement being an achievable dream may be far from the truth.
A study by Bankrate found that 55% of Americans are behind on their retirement savings. Furthermore, 35% said they were “significantly behind” on their savings, whereas the other 20% felt they were only “somewhat behind.”
A study by CNBC found 36% of Americans believe they’ll never get to retire. 59% of study respondents said they were aware they would simply have to keep working past the expected retirement age.
Retirement for the middle-to-lower class is now nearly impossible.
The younger generation is well aware.
If you are in Generation Z (like me) or even a Millenial, you will know the defeat and horror surrounding any of the creature comforts once affordable to American employees. Even just a quick glance at your Twitter feed will find plenty of 20-somethings speaking about the decreasing possibility of owning a home, retiring, or ever being comfortable in the current state of the world.
It’s depressing, but unretirement may start to reduce in later years because retirement didn’t happen in the first place.
According to HR consultancy Mercer’s recent Inside Employees’ Minds research, 79% of people ages 18-24 say high inflation and market volatility “has significantly increased” their financial stress compared with 59% of ages 65 and up.
According to The Harris Poll, only 35% of Generation Z say that saving for retirement is a financial priority for them, compared with 48% of millennials and 66% of Generation X.
Not only has the financial aspect of retirement changed, but the idea behind retirement has changed. If the pandemic didn’t change enough about the working world, it has drastically shifted retirement as a whole.