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Was The ‘ Great Retirement ’ Merely The ‘ Great Pause ’?
Two years on , people are rethinking the career choices they made in the heat of the pandemic . Here ’ s how advisors can help . By David Sterman
AS tHE CovID pAnDEMIC DEEpEnED In 2020 , MAny late-career employees decided they had simply had enough . their shift to working from home and mastering new virtual technologies — and their growing sense of isolation from the workplace — led millions of Americans to retire en masse . yet seemingly overnight , the factors behind decisions to leave the workforce have changed : Inflation has emerged as a potential long-term challenge , diminishing the buying power of retirement nest eggs . Stock markets are no longer pumping up those nest eggs as the major indices tumble from recent peaks . And savings built up during the pandemic are quickly receding . the personal savings rate , which is the amount of income a household saves each month , soared to 34 % in April 2020 , but has been steadily declining , to around 6.5 % this past winter .
In a survey completed by online research firm Momentive this past winter , only 21 % of adults said their finances were better off than a year ago . And nearly 90 % of respondents said they were at least “ somewhat concerned ” about inflation , according to the New York Times .
With finances no longer looking quite as solid as they were just a year or two ago , many people are rethinking their choices , contemplating how they might re-enter the workforce . Ric Edelman , co-founder of Edelman Financial Engines , one of the nation ’ s largest RIA firms , suggests that many people merely embarked on a “ premature sabbatical .”
Just as advisors helped clients assess the merits and challenges of an early retirement , we ’ re now being called on to help sort out clients ’ options as résumés get dusted off and a fresh job hunt ensues .
Sam Englander , a client of mine who worked for the human resources department of a Fortune 500 tech company for 16½ years , has had a challenging job search , despite his impressive résumé . “ I ’ m finding that there can be a gap between my past salary levels and experience and what I am seeing out there in the job market ,” he says . Moreover , younger potential hires “ may have exposure to the latest technologies and skills .”
As anyone who has been out of work for an extended stretch can attest , staying focused and positive is a core challenge . Sam says he has “ maintained a pattern and rhythm that keeps me busy and engaged .” What he misses most is “ the opportunity to interact with colleagues on a daily basis ,” he says .
For this period of unemployment for people like Sam , “ this is a time to recalibrate your goals and needs ,” says Jim Emanuel , an advisor at the Society for Human Resource Management ( SHRM ). “ Do you need to earn the same income as you did before ?” he asks . A willingness to take a pay cut may open the door to more job offers .
may 2022 | financial advisor magazine | 51