Dave and Janet Renauld had a retirement plan before the world was thrust into the coronavirus pandemic.
It was the beginning of 2020. He was 62 and she was 60, enjoying her job and feeling too young to retire. But looking ahead, the couple had recently bought a second home in Arizona and planned to rent it out for a few years – until they could stop working and become what Janet calls snowbirds.
Then came COVID-19 – the fast-spreading, sometimes deadly, novel coronavirus. Hospital admissions from people who contracted the virus surged, and Janet was a Parkview pharmacist.
“It was largely unknown how to treat, and patients were in our ICU on ventilators,” Janet Renauld said through email. “There was no vaccine. It was frightening going into work every day.”
During an annual visit she and her husband made to their financial adviser last June, Renauld said they inquired about early retirement.
“Our adviser looked at our investments and said we could retire tomorrow if we wanted to. The very next morning I submitted my resignation letter to my beloved employer, and haven't looked back since,” Renauld said. “COVID allowed us to take early retirement, and we are having the time of our lives.”
When the health crisis struck early last year, workers of all ages were laid off by the tens of millions. But the result of the pandemic-induced recession is turning out to be vastly different for older workers.
Younger workers now face strong pressure to resume their interrupted careers. But many older workers have reassessed their finances and other factors and concluded that they are about as well off retiring now as they would be going back to work and soldiering on for a few more years. The shifting labor force is likely to have broad implications.
The Renaulds are enjoying more frequent leisure and recreation at Robson Ranch in Eloy, Arizona – midway between Phoenix and Tucson. Janet Renauld describes the location as a 55-plus resort community with golf and pickleball, which is the couple's “shared passion.”
Dave Renauld was a remodeler before retirement, she said, and “sold all his tools to make sure he didn't have to do that again.”
Lynn Hatfield had a career in health care, too, before deciding to retire in October after nearly 24 years with Parkview Health. Hatfield said her job entailed taking newly recruited physicians out to practicing physician offices for introduction. COVID-19 made that difficult when offices were closed or limiting visitors.
Hatfield had been working from home since March last year and said she volunteered to have her position eliminated and then retired. But she missed the connections from going into a workplace.
“I'm a very social person, and I just really enjoy being around a lot of people and retiring in the middle of a pandemic and even prior to that, working from home, I just was feeling really starved for interaction with other human beings,” Hatfield, 66, said during a telephone interview.
Her husband, Jim, has been semiretired, working part time throughout the pandemic. He is a driver for an auto repair business.
Hatfield describes herself as a “voracious reader” who also enjoys working out.
“There was still a void. I still felt like I had a lot of work left within me,” she said. “We're, of course, empty nesters and our kids don't live locally, so it's not like we have Sunday brunch with them or have grandkids around.”
This summer, Hatfield said a Parkview Cancer Institute leader reached out to her to ask about her interest in working again. So Hatfield said she will return to Parkview in a different role, part-time – but fulfilling her need “of being able to serve again.”
“I think that is something that is just really in our blood when we're in health care,” she said.
Financial security is a major factor in retirement timing. Like the Renaulds, some people chart a path in consultation with a financial expert.
“I'm a little bit biased, but definitely talk to a financial adviser who can look at all the issues that might be involved that the guy on the street may not consider,” says Al Lindsten, senior financial adviser with Fort Wayne-based Shelton Financial Group.
The decline in pensions means many people won't have that income stream that older generations could count on. Lindsten said there are other options, though, to consider for potential retirement income such as annuities.
Long-term care, which many people may require as they age and encounter health issues, is costly, Lindsten said.
“Right now, I think longevity is a huge consideration,” he said. “I think it's important you understand the impact of inflation. (People) look at what they're spending now and think that's what they're going to continue to spend, but in reality, that's not what they're going to continue to spend because of inflation.”
In the last decade just before the coronavirus outbreak in the U.S., employment among people 55 and older grew on average by 1 million a year, compared with about 750,000 for prime-age workers. The fastest growth rate was among those 65 and older.
But since last fall, after an initial burst of recovery, employment for older workers has plateaued. Right now, the change is aggravating the labor shortage.
Even as businesses struggle to find workers, the number of adults 55 and older participating in the labor force – that is, working or looking for work – has barely budged this year and is actually down from last fall, government statistics show. That's in sharp contrast to people in their prime working years, ages 25 to 54, who have made significant strides getting back into the job market.
Even before the pandemic, labor trends were not looking good for employers. With Americans having fewer babies, the working-age population is projected to grow over the next 10 years at a fraction of recent prior decades.
“If a bigger number retire than in the past, that's a big potential crash for the labor force,” said William H. Frey, a demographer at the Brookings Institution.
The long-term consequences cut deep: A smaller contribution from baby boomers to the labor force suggests slower economic growth ahead for the U.S. and potentially negative effects on the economy's overall productivity.
Reduced availability of older workers will complicate the Federal Reserve's ability to steer interest rate policy and manage inflation. There are also huge implications for public finances: Having fewer workers is likely to mean reduced tax revenues, including payments into Social Security.
In the first quarter of this year, 30.3 million baby boomers reported they were out of the labor force due to retirement, according to Pew Research Center's analysis of government data.
That is 2.7 million more than in the first quarter of 2020, a much bigger increase than the average growth of roughly 2 million retired boomers annually over the last decade.
So far, there hasn't been an accompanying jump in Social Security claims – one can start drawing benefits as early as 62. Experts suspect that may be partly because people, up to now, have been making do with savings and generous forms of pandemic aid, including expanded unemployment benefits and several rounds of relief checks.
The Los Angeles Times contributed to this story.