(BLOOMBERG) – After a year of early-morning Zoom calls, the spectre of a deadly virus and soaring stock and real estate values, working American baby boomers who can afford it plan to get out while the getting’s good.
About 2.7 million Americans aged 55 or older are contemplating retirement years earlier than they’d imagined because of the pandemic, government data shows. They’re more likely to be those who have a larger amount of accumulated wealth, and many cite robust retirement accounts and Covid-19 fatigue for their early exit, according to interviews with wealth managers and federal surveys.
Much like the US economy’s so-called K-shaped recovery, the pandemic is treating the affluent differently, empowering them to leave corporate life early. Others who lost jobs had to delay retirement, or grew discouraged and retired before they were ready.
Early retirements, whether desired or forced, will deprive the labour market of some of its most productive workers and have an impact on the economic recovery that is still too early to evaluate. Federal Reserve chairman Jerome Powell last week cited a “significant number” of people saying they’ve retired as one reason companies are reporting labour shortages, although it’s unclear if they’ll eventually rejoin the job market.
Mr Craig DiLorenzo, 58, is among those who chose to bow out, after a career at industrial giant 3M Co. Frustrated over 6am teleconferences, he said his thoughts turned to spending more time pursuing his outside passions, including volunteering with the Salvation Army.
A scare with cancer five years ago made him reconsider his commitment to climbing the corporate ladder, and the last year stuck at home only reinforced those feelings, he said.
“It makes you think, ‘Does all this matter as much as you think it does?'” said Mr DiLorenzo, who retired at the end of March.
Those in his cohort are better known for hanging on to their jobs for as long as possible, usually retiring later than their European counterparts. Their potential exodus from the corporate world, combined with a sharp increase in the number of business owners seeking to retire sooner than they anticipated, is a worrying phenomenon for companies that rely on their accumulated expertise.
In addition, burnout among older physicians and teachers is pushing some to an early exit, threatening shortages in healthcare and education.
Financial advisers say they’re seeing a new “life is short” attitude among clients with enough money socked away to carry them through retirement.
The prospect of going back to the daily grind is going to be “a really tough pill for a lot of people to swallow”, said Mr Kenneth Van Leeuwen, founder of financial services firm Van Leeuwen & Co.
One client, an executive whose stock portfolio has performed well, is retiring at 48 as the prospect of having to go back to travelling 10 to 12 nights a month isn’t appealing any more, he said.
Ms Melissa Marteney got tired of working more with less as the pandemic dragged on. She helped oversee state parks for the Massachusetts Department of Conservation and Recreation and was tasked with hiring hundreds of lifeguards and other seasonal workers each spring. But even as people flocked to parks to escape Covid-19 lockdowns, the state cut the seasonal administrative staff that helped her screen candidates.
She retired this year at 58, about five years earlier than expected. Her husband also retired from his job at a financial services firm, and now the couple plan to sail to the Caribbean over winters in their 13m sailboat. By exiting early, she’ll collect a smaller payout from her pension, but the couple’s other retirement accounts have ballooned so much lately that “we’re going to be in the green until I’m 92”.
“I’ve seen so many people who have decided to wait too long to retire – many of my colleagues or older family members – and they get one year of retirement and get sick and pass on,” she said. “I don’t want that.”
A November study from Pew Research Centre found a surge in the number of baby boomers, those born between 1946 and 1964, who reported being retired compared with previous years – 1.2 million more than the historical annual average.
Other data points back up the findings. The number of people expecting to work beyond age 67 fell to a record low of 32.9 per cent last month, according to a New York Federal Reserve survey. And about 2.7 million workers aged 55 and older plan to apply early for Social Security benefits – almost twice as many as the 1.4 million people in the same age group who anticipate working longer, according to a recent US Census Bureau survey.
Concern that some or all of their savings could evaporate has especially weighed on entrepreneurs who have been through the 2008 Great Recession.
The number of business owners who say they plan to retire sooner than expected has doubled since last August, according to a survey by financial services firm Wilmington Trust.
“Dealing with two major economic events in less than 15 years may have them wondering if it’s time to take money off the table, especially as they near retirement,” said Mr Stuart Smith, a national director of business value strategies at Wilmington Trust.
The loss of older workers will hurt the labour market. Those workers have strong productivity, lower absenteeism and they can train and mentor newcomers, said Ms Susan Weinstock, vice-president of financial resilience programming at seniors advocacy group AARP in Washington, DC.
“Older workers are especially strong in soft skills – things that develop over time and are difficult to teach,” she said.