How to Handle Early Retirement

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The pandemic caused millions of workers to lose their jobs. From restaurant employees to flight attendants, from teachers to travel agents, employees who worked in industries that could not operate because of social distancing rules were sent home. While layoffs disproportionately affected low-wage workers in service occupations, nearly every industry was affected by the pandemic.

Economic recovery has restored many lost jobs. In fact, businesses are having difficulty finding employees to fill positions, as workers who felt undervalued by their employers decided to look for better opportunities rather than returning to work. 

Still, some employers have avoided recalling older workers, filling their former positions with younger employees. Laws that prohibit age discrimination are notoriously weak and easily circumvented by employers that do not make obvious references to age when making employment decisions.

Older workers have more difficulty finding replacement employment than younger workers. When they can find a new job, they typically earn less after reentering the workforce than they earned before they lost their jobs. Whether that dynamic will hold true in a time of labor shortages and rising wages remains to be seen.

Early Retirement

Many older workers have chosen to retire early rather than searching for a new job or returning to a former job that was unsatisfying. However, the pandemic is not the only cause of early retirements. Some workers retire early because their health does not permit them to meet the physical demands of their former employment. Others stop working because they cannot afford to hire a caregiver for a spouse or relative who needs 24-hour assistance. Whether voluntary or involuntary, early retirement can be financially and emotionally difficult.

Reduced Social Security benefits can be claimed at age 62, but full benefits are only available when the recipient reaches “full retirement age” — between 65 and 67, depending on the recipient’s year of birth. Between a quarter and a third of Social Security recipients apply for Social Security at 62, often because they have no choice. In the long run, retirees who apply at 62 might collect as much or more than retirees who apply at 67, but only if they live to their normal life expectancy. 

In addition, most people qualify for Medicare at age 65. An early retirement often forces retirees to find and pay for their own health insurance or to gamble that they won’t need healthcare before they can obtain Medicare coverage.

Health Outcomes of Early Retirement

While many workers dream of taking an early retirement, that dream is best realized after careful planning. Financial planning and a substantial income might allow the kind of investments that make it possible to retire without stress. 

Unfortunately, workers who are forced to retire early do not always have immediate access to Social Security or other retirement income. Planning for retirement should include planning for the risk of being forced to retire early. Without significant savings and investments, the transition to retirement can be economically challenging.

The National Bureau of Economic Research reports that retirement is associated with increased illness, decreased physical mobility, and a decline in mental health. While those outcomes are not inevitable, the research suggests that retirement is often associated with declining physical activity and fewer social interactions. Involuntary retirement exacerbates the negative impact on physical and mental health.

Coping with Early Retirement

Financial experts suggest that involuntary retirees make an inventory of their needs and assets. If expenses are likely to exceed retirement income, it may be time to downsize. Moving to a smaller residence or a less expensive city might help early retirees stretch their budget. Taking advantage of work skills to begin working from home might help retirees replace some of their lost income.

When early retirement leads to boredom, social isolation, or a sense that life is no longer fulfilling, retirees may need to learn new coping skills. Adjusting to a new reality begins by accepting the things that can’t be changed. Viewing an uncertain future as a challenge to be embraced is a key to mental health.

Finding new means of expression and returning to long-lasting interests can also be stress relievers. People who cannot work for wages might be able to volunteer, share their skills at a workshop, or to act as a mentor. Social networks can be strengthened by exploring community centers and joining support groups for seniors who are transitioning to retirement. Retirement is a good time to resume hobbies that were abandoned for lack of time.

Exercise and a sensible diet can help retirees preserve their mobility and avoid heart disease. Studies suggest that “exercise and leisure-time physical activity increase after the transition to retirement,” largely because retirees have more time on their hands. On the other hand, people who were employed in manual labor may become less physically active after retirement. Combining a brisk walk every day with balance and muscle-strengthening exercises will help retirees maintain their health while relieving stress.  

Finally, pets are great companions for older people. Pets help retirees cope with loneliness and isolation. Pet owners develop a therapeutic bond with their animals that reduces stress. And the joy of taking a dog for a walk provides an incentive to exercise daily.

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