Inflation is driving retirees back to work by David Cravit
It’s routine for financial planners to assume a certain rate of inflation in evaluating a retiree’s future expenses and income. “Typically for just your general living expenses, you see maybe a 2% to 3.5% inflation assumption in that planning,” says Kyle Newell, a financial planner in Florida, quoted in this article.
But what happens when inflation hits 9% — and may be going higher?
For many retirees, the answer is simple — go back to work.
The article cites Joe DiPastena, who actually retired earlier than planned. And then along came the economy of 2022. “I just kept watching my investments go further and further down, and then my financial advisor was saying, ‘maybe we ought to do this or that.’ And it’s like, ‘well, the best thing I can do is go get a freaking job.”
He wound up in a completely new field compared to his previous career.
Anecdotes like this are powerful, but the bigger picture is even more so, and there is no shortage of statistical evidence as to what is happening. This article from the LA Times presents a great overview.
The 75-plus age group is the only age group whose labor-force participation rate is expected to grow over the next 10 years, according to the Bureau of Labor Statistics. By 2030, the number of 75-plus workers will nearly double, and almost 10% of the entire labor force will be 65 or older
Four out of five US workers aged 50 or older, who hold financial products worth at least $10,000, are now very worried about inflation when they retire. More than half expect to work part time in retirement as the only way to cover day-to-day expenses.
And they have reason to worry. Even without the latest blows from inflation, almost 40% of Americans aged 65 to 69 can’t cover one year of minimal care without exhausting their resources. That’s according a survey last year, conducted by the Center for Retirement Research at Boston College.
On the good news side, there’s a huge unfilled demand for workers, and more and more businesses are turning to the older population as the solution.
Not surprisingly, there are web platforms to bring employers and potential employees together.
One is Rent A Grandma, which focuses on nanny, child care and pet care jobs. Todd Pliss, founder, says he’s seen the number of applicants jump by over 25% in over the past year. Another is Seniors4Hire, which has been in business 20 years and reports a 20% increase in applicants since March, along with a 12% increase in employers advertising jobs.