Since the dawn of the pandemic, over 3 million Americans retired, some before reaching the age of 65. However, many have had to return to work in recent months. As CNBC reports, Nick Bunker, an economist at Indeed, recently analyzed a federal population survey and found that around 1.7 million Americans who retired a year before have returned to work, accounting for slightly more than 3% of all retirees. Nobody retires, intending to go back to the workforce. That being the case, why is this “reverse retirement” happening? There are various unforeseeable factors behind the trend.
It is important to note that retirees are not just returning to replenish their bank accounts. The majority of the formerly retired are motivated by other factors, ranging from the unpredictability of the stock market to a desire for more social interaction. However, the vast majority work only part-time.
Here are five reasons why the formerly retired Americans are heading back to work:
Dynamic Work Landscape
The lockdowns compelled businesses to accept remote workforces. To get the job done, employees across all ages and skill levels had to learn to participate in video calls consistently and send messages through instant messenger apps; in other words, embrace technology. This changed the equation for retirees as they could now earn a living without leaving their homes. They didn’t have to think about the virus exposure or the energy needed to commute daily. Due to this paradigm shift in the way of working, a lot of opportunities opened up for seniors leading them to head back to the workforce.
Compared to younger generations, seniors tend to be more isolated, and this reality was aggravated by the pandemic, as found in the University of Michigan survey on aging. According to the survey, 56 percent of the seniors felt socially isolated post the pandemic in comparison to 28 percent in 2018. Going back to work allowed them to not only overcome this pandemic-induced loneliness, but also made them less vulnerable to depression as the workplace social interactions helped them strengthen their mental state.
Consistent Rise in Inflation
Considering the inflation rate in the US reached 8.3 percent in the month of April, the cost of everything from groceries to housing touched an all-time high since the early 1980s. On the other hand, 2022’s Social Security Cost of Living Adjustment (COLA) stands only at 5.9 percent, indicating the increasing woes of the retirees who heavily rely on Social Security. With such signs pointing out that their retirement savings are grossly inadequate, many seniors reentered the workforce as they needed to combat the rising cost of living.
Highly Volatile Stock Market
As consumers invested their extra wealth while staying at home during the pandemic in stocks, bonds, and other asset classes, the stock market skyrocketed. The growth in retirement savings encouraged many people to take the plunge, leave employment, or retire early.
After a year, however, the stock market declined due to escalating inflation and rising interest rates. It’s important to remember that any retirement fund’s equity component also suffers when the stock market is under stress. Unlike before, the majority of employers provided pensions that legally entitled retirees to have a steady monthly payout after leaving the workforce. Today, retirement accounts are often tied to the ups and downs of the stock market.
In a statement by Sinem Buber of Ziprecruiter, she mentioned that retirees saw significant discrepancies in their monthly statements; some even saw a sharp decline in their 401(k) accounts. Making the recently retired flee to safer markets and some returning back to work as they do not feel particularly confident about their financial status.
Emerging Labor Shortages
According to a KornFerry report, more than 85 million jobs could go unfilled by 2030 due to a lack of skilled workers. The financial and business services industries will be most affected; a looming 10.7 million worker shortage is expected, more than 45 times the size of the sector’s global workforce.
Although 2030 is still some time away, Forbes reports that in the United States alone, 54% of skilled workers are being replaced, the highest level in over a decade.
As the labor shortage continues to make hiring difficult for businesses of all kinds, employers throughout the country are improving perks and rising compensation to attract new workers. And it turns out that the robust job market is luring retirees and those approaching retirement age into new occupations. Retirees saw an opportunity to take advantage of the current labor market, especially with the amount of COVID-safe, remote jobs available today.
The Great Return: What Employers Should Do When Welcoming Back Retirees
If you want to hire or rehire retirees, you should do so formally and thoughtfully. This allows you to assess their needs and devise a strategy to help meet those needs where possible. But most employers don’t know how to get back in touch with these people before they are ready to take a retirement package and leave, maybe to a competitor.
So how do you bring them back—and keep them?
Tailoring the onboarding experience to their needs
To stay competitive in the talent market, employers must prioritize transitional guidance that can keep employees up to date on general policies and expectations. Even if the retiree is being rehired, the job duties, responsibilities, and expectations may still be needed to be explained. They should also have a thorough plan for getting each new employee or person coming back to work used to the workplace.
For example, if you give them training and resources, they can adjust more quickly. If a retired employee comes back to your workplace because he or she wants to switch industries, keep in mind that the amount of training needed depends on many things, such as how much the employee already knows and what skills he or she already has.
Rewrite your salary and benefits
A company’s commitment to providing employees with meaningful benefits can be key to attracting top talent. Leaders can’t just write one big check after another, expecting to keep employees in the fold; however, many are trying to do.
Companies will have to restructure compensation packages in ways that appeal to recently retired employees. They must strike the right balance between standard pay and the kinds of relationship-based things that employees expect. There is no right way to do this, but some trial and error may be involved. For instance, workers are taking positive steps toward their health and well-being. So instead of free lunches, you may want to offer better health packages for them or for their children, mental health support, flexible schedules, etc.
In today’s war for talent, employers should recognize experience and compensation as both a regime factor and a motivator. Employers should ensure that every worker stays financially secure, has the confidence and know-how to make decisions, and is mentally and physically healthy. Such an investment will help make the difference between an employee staying at a firm or taking his skills elsewhere.
There are numerous advantages to tapping the retiree pool, including a more experienced, dependable, and diverse workforce. However, it is also critical to have a well-thought-out plan in place that highlights health, flexibility, and experience for reintroducing and attracting recently retired to the workplace.