COVID-19 drove millions of older adults to retire, but inflation and other unexpected life events are causing them to return to the workforce. According to the job search website Indeed, of those who were retired a year earlier, 1.7 million, or 3.3 percent, are employed again. The majority of these so-called unretirees are working part time.
Nobody goes into retirement expecting to come back into the workforce. But there are a lot of unforeseen reasons why that can happen, including the following.
At last check, inflation was running at an annual rate of 8.3 percent, the highest since 1981. That’s sending prices soaring for everything from food to gas. As of April, food prices were 10.8 percent higher year-over-year. Inflation causes pain for everyone, but it’s particularly brutal for retirees on a fixed incomes. “The purchasing power of retirement savings is eroding every single month,” says Sinem Buber, lead economist at ZipRecruiter. “This is quite new for them, and it’s scary.”
To quantify just how hard inflation can be on retirement savings, consider this calculation. One percent inflation over 20 years, based on a $1,341 monthly income, will result in a $34,406 cumulative loss of buying power, according to modeling conducted in 2016 by LIMRA, an insurance industry trade association. If you use the same methodology to calculate the impact of 8.3 percent inflation, the shortfall jumps to over $400,000, says Buber. “This is as high as the median house price right now,” she says. To cover the rising costs of everyday expenses, retirees are going back to work.