It has been deemed The Great Resignation. This extraordinary trend is seeing numerous Americans leave their jobs—some are moving on to greener pastures, others are leaving for extended periods, and still others, especially older Americans, are leaving for good… retirement. While endless time has been spent examining this issue in countless articles, one of the biggest questions is why it is happening here and now.
The easiest answer is that this is an appropriate response in the wake of the COVID-19 pandemic. It is difficult to find anyone or anything that remains unaffected by the pandemic. While some people are choosing to stay at home because they don’t want to risk illness by going into the office, the full picture is a bit more complex, especially for folks with jobs where remote work isn’t an option. There is another factor at play here, however. It’s been a long time coming but hasn’t been talked about much because of other more pressing world events.
The Baby Boom Meets the Retirement Boom
These last few years have been a bit different than past years. Reaching retirement age now doesn’t always mean completely exiting the workforce. Many retirees start businesses, shift to part-time work, or change their focus from their jobs to working for charities or nonprofit organizations. Back in 2008, the oldest baby boomers reached age 62. This coincided with the so-called “Great Recession,” when the economy declined and perhaps represented a less-than-advantageous time to start retirement. Lots of baby boomers decided to wait a few years to retire. Fast-forward to 2021 and while the economy had distanced itself from those events, people were faced with new developments. Just over 50% of adults aged 55 or older had exited the workforce and retired. For adult Americans aged 65 to 74, the percentage who had left the workforce was 66.9%, just over two-thirds of this population.1
So, rather than seeing everyone head to the door simultaneously, what we’re seeing is a bit of a “catch-up” period. We are looking at a picture of what might have been if the Great Recession had gone a bit differently. The pandemic created a transition period in which people decided that it was a natural time to work less, transition to new things, or retire completely. The pandemic has extended much longer than any of us could have imagined, with the more potent Delta variant making way for the more contagious Omicron variant. Examining this context makes it easier to see why someone reaching the end of a long and rewarding career might choose to exit the pattern of working during COVID-19 and parachute into a less stressful, more enjoyable paradigm.
Is It Your Time, Too?
You might be thinking that this period of mass retirement presents you with an opportunity to cast off the yoke and ease into retirement. Despite the large numbers of people making this big transition, it is important to remember that moving with the crowd isn’t always an ideal action.
It’s also possible that now is a great time to transition into a different opportunity for your last few years of work. Change it up a bit. Do you have a business idea you’ve been thinking about? Now is a great time to put it into action. Perhaps you want to transition into a new role at work or with a different firm that will be less demanding when you finally begin your transition into retirement. This is also a great idea.
If you think now is the right time, your first step is to make some time to talk with your trusted financial advisor. They can look at your overall financial strategy to give you a better overview of where you stand and the drawbacks and advantages of retiring in the current environment.