Rising costs are causing people to worry about their retirement
An AARP survey found that retirees are worried about not having enough income to support their retirement needs.
Fox – 10 Phoenix
When Diane Weatherington retired from a long career as a purchasing and contracting agent in 2020, she thought she had enough money to live comfortably, travel the world and babysit her six grandchildren.
But stuck at home in Altamonte Springs, Florida, during the COVID-19 pandemic, she had to do something to keep herself busy. So she started consulting for local government agencies and found part-time remote work.
As the cost of living gradually rose, Wetherington realized that while he could not quit his job, he could still afford the necessities of life and his twice-yearly trips abroad. Now, even those ventures are on hold until we can figure out “where the economy is going,” she said.
“I was doing well financially in retirement until everything started going up, like home insurance and car insurance, but now food and everything else has gone up,” said Wetherington, 73. “Fortunately, it’s also something I enjoy doing. But I’ll probably have to work as long as possible to be able to afford to live.”
Wetherington is part of a growing wave of “non-retirees” who are returning to work and working well beyond the traditional retirement age of 65.
A new AARP survey of adults 50 and older shared exclusively with USA TODAY found that 1 in 10 retirees have replaced their bucket list with a 9-to-5 job, many out of financial necessity.
What’s crushing your retirement dreams right now? Four in 10 older Americans say they are looking for work or are returning to work just to make ends meet.
“For me, this is an eye-opener,” AARP’s vice president of financial resiliency programs, Carly Roszkowski, told USA TODAY. “It’s not just, ‘I’m afraid I’ll outlive my retirement savings,’ but more specifically, ‘I’m having a hard time paying my daily living expenses today.'”
Why Older Americans Can’t Afford to Retire
With longer lifespans and a desire to stay connected and have a sense of purpose, more Americans are working into their 60s and 70s.
About 38 million Americans over age 55 are working or looking for work, more than 2.5 times the number of seniors 40 years ago, according to AARP.
This dramatic demographic shift has reshaped the workforce, with older Americans now making up nearly a quarter of the workforce.
What’s different now: Economic pressures are increasing the proportion of “non-retirees,” Roszkowski said.
For decades, the combination of pensions and Social Security has made it possible for many people to enjoy a worry-free retirement.
Today, Social Security payments are less than half the average wage, and many older Americans don’t have enough savings or 401(k) accounts to weather economic shocks, much less afford to cover the rising cost of living.
According to the AARP survey, 7% of retirees said they either stayed or returned to work in the past six months, more than twice the average rate. Nearly half said their main motivation was to make money, with the desire to stay active a close second at 14%.
Post-retirement research consistently finds that income is the number one reason retirees return to work, but the differences aren’t all that great, Roszkowski said.
High cost of living shatters safety net
T. Rowe Price estimates that 20% of retirees continue to work part-time or full-time, and an additional 7% are looking for work. Single retirees and women are much more likely to cite income as a reason for not retiring in their golden years.
Many of these older Americans are living on the edge, said Angela Antonelli, executive director of the Center for Retirement Initiatives at Georgetown University’s McCourt School of Public Policy.
More than one in five households aged 65 and older rely on Social Security for more than 90% of their income, and more than half of households aged 55 and older have nothing saved for retirement, he said.
“Older workers are the fastest growing segment of the workforce, but too many are not working by choice,” Antonelli says.
Now, the safety net they had is being shredded by the rising cost of living, said Jeffrey Sanzenbacher, a researcher at Boston University’s Retirement Research Center.
If retirees who are worried about paying for groceries, housing, health care and utilities don’t receive some relief, “more people will want to take a side hustle and cancel their retirement,” Sanzenbacher said. “So the question is, can they do it?”
He said that while jobs are disappearing, unemployment is rising and many retirees who are forced to look for work will find it difficult to find work.
“And those are exactly the people who are most likely to have problems. The people who need to come out of retirement are the ones who don’t have much savings and don’t have much to fall back on,” Sanzenbacher said.
