The coronavirus outbreak threw off many people's financial plans. Many seniors, for instance, who planned to work well into their sixties were forced to retire earlier due to health issues. In the meantime, millions of jobs were lost because of the pandemic. Also, some older employees were downsized, resulting in an earlier retirement than intended.
Many individuals became financially cautious due to the epidemic, particularly after the stock market fell in March 2020. However, according to a Pew Charitable Trusts survey, most older employees do not plan to postpone retirement because of the pandemic. And this is a good thing.
Why are older employees adhering to their plans?
When stocks plummeted in March 2020, it became evident that unless the market recovered fast, many older employees about to retire would have to delay their plans and wait until their portfolio values increase again. But then something incredible happened: the stock market swiftly recovered, to the point that portfolio values largely recouped well before the year's conclusion. And probably, this is what salvaged many people's plans.
This is what’s curious: The Pew Research Center poll was done in May and June of 2020 before the stock market fully rebounded. However, what may have occurred is that near-retirees had enough of their funds in safer investments to keep their plans afloat, even as stock prices plummeted.
A pleasant yet unexpected turn of events
After a year in which the unemployment rate for employees age 65 and over hit 15.6%, the most on record for that age group, it’s incredible that so many older Americans are adhering to their retirement plans. Actually, only 16% of older Americans said they plan to retire later than they otherwise intended because of the pandemic.
Even still, if you're in those 16%, you might not be pleased. If that's the case, increasing your IRA or 401(k) plan contributions when you recover financially from the effects of the previous year could help you come closer to your original retirement date. Assuming you can afford it, you should consider reinvesting any money you took out of your retirement savings under the CARES Act.
And if you're still worried about postponing your retirement as a consequence of the pandemic, remember that Americans have longer life expectancies these days, so if you put it off, you may still have plenty of post-work years ahead of you. Postponing retirement may also allow you to delay filing for Social Security, which might result in a bigger monthly payout for the rest of your life. Even if it wasn't part of your initial plan, it's a solid silver lining.
