The devastating recent jobs numbers show that the coronavirus is taking a historic toll on workers of all ages. Over 10 million filed for unemployment in the last two weeks of March.
Among those affected are the 54 million U.S. workers age 50-plus. According to a federal jobs report released Friday, the unemployment rate for workers 55 and older rose from 2.6 percent in February to 3.3 percent in March. The report doesn't capture the job loss of the last few weeks, so the number of unemployed is expected to grow dramatically in next month's report.
For 50-plus workers, the crisis spotlights a range of challenges — some that they share with all workers and others unique to them. These challenges include limited emergency savings, the effects of age discrimination in the workplace, and lack of paid sick leave or extended paid family caregiving leave.
The COVID-19 crisis requires swift action and demonstrates the urgent need for long-term steps to ensure older Americans have the financial resilience to weather such storms — and to stay healthy. This includes action by federal, state and local governments, as well as employers and individuals.
An emergency in emergency funds
When a crisis hits, all workers need an emergency fund to help buffer the impact of unexpected expenses and lost pay. A buffer of just a few hundred dollars may prevent families from having to go without food or medicine. Emergency savings may also delay the need to turn to high-cost debt and retirement savings to cover living expenses.
But according to AARP's Public Policy Institute, 51 percent of Americans over age 50 have no emergency savings account. Lack of liquid savings is a challenge for people at every income level; even among people with $150,000 or more in household income, 1 in 4 have no emergency savings account. The coronavirus may exact a greater toll on older workers without emergency savings because they have far fewer working years left to pay off debt and rebuild savings.
The most recent coronavirus relief package temporarily lifts penalties for early withdrawals from certain retirement accounts, such as 401(k) plans. While this is an understandable allowance, workers who spend down their nest eggs to cover a financial emergency may harm their future financial security.
Instead, policymakers should continue fortifying the social safety net. The private sector also has an important role to play. For instance, more employers could facilitate emergency savings through payroll deductions to help make it easy for employees to save for unexpected expenses.