An April 2022 report from the Indeed Hiring Lab revealed that around 1.7 million people who retired in 2021 rejoined the workforce by March 2022. Its findings indicated that labor force is heading back to pre-pandemic levels.
While many would attribute the phenomenon to inflation, career coach John Tarnoff said un-retirement is an underreported phenomenon that has been going on for years.
“The costs of living were going up even before the current inflationary cycle that we’re in now – costs were rising, fixed incomes were no longer good for people, Social Security as an institution is under threat,” said Tarnoff, who is based in Los Angeles.
Bickling Financial Services Chief Compliance Officer Spencer Betts, meanwhile, said that some retirees could be heading back to work due to high job vacancies and wage increases. He added that older workers, especially those who have been fully vaccinated, may also feel safer now than they did at the peak of the pandemic.
Betts also pointed out that other workers may opt for part-time work once they hit retirement age. A recent trend he cited was people sliding into retirement and cutting back their work hours from 30 hours, then 20 and finally down to 10.
Tarnoff remarked that retirement is a misnomer because there is no such a thing like it anymore. He continued that plenty of older workers may have been pushed out during pandemic-related layoffs instead of voluntarily choosing to retire.
“I think that older workers are going to be caught in a tight squeeze because they don’t have the income overall to keep up with inflation.” (Related: The end of retirement: Baby boomers working through their golden years.)
Retirees returning to work could face higher taxes
Inflation in the U.S. hit 8.6 percent in May 2022, the highest in 40 years. It resulted in a domino effect in which prices of everything, from groceries to gas, have ballooned.
Based on data from the Census Bureau, the 2017 mean income for households with at least one person 65 years or older, was just over $44,000. Social Security benefits usually made up the highest proportion of that income at $16,560, while earnings came in second at $13,950.
Retirees heading back into the workforce do not necessarily want to go back to the same job or salary range that they had before they retired, because coming out of retirement also means that they have to watch out for the potential tax implications that higher incomes bring in.
Workers who have tapped into their Social Security benefits will pay 6.2 percent on their earnings up to $147,000, while those who are self-employed face a 12.4 percent cut that can be offset by income tax provisions.
The state where retirees live and their state’s income tax rate also play a role in the amount deducted from their earnings. Almost half their earnings can go to taxes, so they should not price themselves too low.
While many knew that Baby Boomer retirement was coming, the Wuhan coronavirus (COVID-19) pandemic accelerated it. A report by Dayton Daily News said 38 percent of people aged 50 and up retired, left or considered leaving their jobs during the pandemic. Meanwhile, 21 percent said they retired earlier than planned because of the pandemic.
Still, some retirees looking to get back to work are not just looking for something to do. They still need money for rent or mortgages, gasoline, food, healthcare and prescriptions.
“Whenever you go into retirement you are forced typically onto a fixed income, which is the worst possible scenario you can be in during bouts of inflation,” said Kevin Willardsen, an associate professor of economics at Wright State University.
“They’re not going to be able to afford to stay unemployed, to stay retired. My expectation is that if nothing changes these people have no choice. They are going to have to go back to work.”
Visit Inflation.news for more updates about how price surges are affecting the American workforce.
Watch the video below to learn why retirement plans are at risk.
This video is from the What is happening channel on Brighteon.com.
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