The coronavirus pandemic is affecting the economic security of workers of all ages. However, it has been particularly damaging for older workers, as it has led to more of them retiring early.
Older workers have been impacted by the one-two punch of layoffs and the risk of getting infected on the job from the coronavirus, which is driving the increasing share of them retiring early. According to the New School’s Schwartz Center for Economic Policy Analysis, 2.9 million workers between the ages of 55-70 have retired due to the pandemic, which is higher than the 1.9 million workers in the same age cohort who retired in the first three months after the Great Recession of 2008. A July study from the University of Chicago also found that the number of workers who retired increased by seven percent from January to April.
Workers aged 55 and older have experienced one of the highest unemployment rates and higher rates of poverty due to the pandemic-induced economic crisis. According to the Schwartz Center, more than 3 million older workers will go into poverty during retirement as a result of the economic crash. Finally, older workers are more at risk of becoming fatally ill if they contract the coronavirus, as the Centers for Disease Control and Prevention (CDC) reports that eight out of ten COVID-19 deaths in the United States have been adults 65 and older.
Retiring early can have consequences for both employers and employees. For example, many older workers serve as public educators. According to a recent presentation from the National Institute on Retirement Security (NIRS), 65 percent of public educators surveyed will serve at least 20 years on the job, and 68 percent of them will serve until they are eligible for retirement. These long careers in public service are a tremendous asset as a high turnover rate can be expensive for employers. Furthermore, these jobs often require a high amount of education; according to the National Center for Education Statistics, nearly 60 percent of public teachers hold more than a bachelor’s degree. The high level of education that is often required for these jobs makes it more difficult for employers to find replacements for public educators if they decide to retire early.
For employees, retiring early means they will save less for retirement than if they had retired later, and their Social Security benefits will also be lower. This disproportionately impacts older workers who earn lower wages, according to the Schwartz Center, as they are more likely to lose their jobs in the recession than other workers, forcing them to start withdrawing from Social Security earlier to make ends meet. Finally, they could also face higher than expected health care costs that could damage their retirement plan, as workers are not eligible for Medicare until they are at least 65 years old.
One way policymakers can protect older public employees when they retire is by maintaining their defined-benefit pension plans. They provide the economic security these workers deserve in retirement after a lifetime of serving the public in essential roles that are even more critical to society during this pandemic, such as the aforementioned educators, nurses, firefighters, municipal workers, and more.