Covid-19 Is Forcing Early Retirements: What It Might Mean
Let’s be honest: Covid-19 has had a drastic impact on our lives. It has changed much of how we work and live. It has affected our businesses and our jobs. And now, it is even affecting retirement. The pandemic has forced close to 3 million people to retire earlier than they had anticipated—and as of August 2021, 19.3% of the population is retired, an increase of 1% from 2020. What might that mean going forward?
While it’s great to see people who have worked 30-40 years finally be able to call it quits and enjoy the remaining years of their life in leisure and peace, it is a bit worrying to see people retire before they had planned to. In most cases, if someone says, “I retired early”, it generally means that they overestimated the amount of money they would need to survive retirement, and thus found themselves in the considerable position of being able to do so earlier than anticipated. However, one fear that has emerged as a result of Covid-19 has been forced early retirements. It is possible shutdowns and stay-at-home orders have caused many folks close to retirement to just call it quits and not return to the workforce. It is equally conceivable that, due to the virus’ particular risk towards older populations and the vulnerable, that many have decided it is better to stay home and stay safe rather than risk their life outside.
Whatever the cause may be, retiring early could become troublesome for these retirees later on in life. If you or someone you know has told you they retired early than anticipated because of the pandemic, make sure they have reviewed their finances accordingly. Retiring 1 year earlier than anticipated can often impact 2 years of retirement. For example, if someone had planned to retire at 65 so he or she would have enough money to last them to age 95, retiring at 60 could set them back where they could run out of funds at 85. This is why it is vitally important for those who have decided to retire early to revisit their financial plan, or, if they don’t have a plan and are unsure how to make one, they should seek a professional financial advisor who could assist them and help guide them through the process. Retiring is great, but it also requires planning, especially in today’s constantly changing environment.
