En español | An additional 2.4 million people nationwide filed new claims for unemployment benefits last week, according to the U.S. Department of Labor. The continued job losses and persistent volatility of the stock market in the midst of the coronavirus pandemic mean many older workers may struggle financially in retirement as a result of this recession, according to new research.
More than 38 million people have applied for unemployment since businesses began closing nine weeks ago due to the COVID-19 pandemic. While the weekly numbers have dropped since the historic spike of 6.6 million for the week that ended on March 28, the ongoing toll is still staggering.
"At 2.4 million new claims last week, the seismic impact should not be dismissed because earlier shock waves were larger,” says Mark Hamrick, senior economic analyst for Bankrate. “This number of new claims alone is about equal to the population of the city of Houston, Texas."
The widespread job losses have affected all parts of the nation's economy and workforce. For workers age 55 older, the unemployment rate climbed to 13.6 percent for April, up from 3.3 percent in March, according to the U.S. Bureau of Labor Statistics. The number of unemployed older workers grew by 3.7 million people during that same one-month period.
"These are unprecedented times and AARP has been working to ensure that older workers have benefits to help them weather this terrible pandemic,” says Susan Weinstock, AARP's vice president of financial resilience programming. “We fought to strengthen and expand paid sick and family leave, as well as unemployment insurance for those who cannot work due to the coronavirus. We also offer tools and resources like our Job Board and Resume Advisor to help the 50+ who are looking for a new job.”
What the job losses mean for retirement plans
The one-two punch of rising unemployment and a volatile stock market could hit workers age 55 and older particularly hard because they have fewer years to recover lost earnings and savings before they reach traditional retirement ages, according to a recent report from the New School's Retirement Equity Lab. Their projections find that an additional 3.1 million older workers overall will experience poverty in retirement due to the pandemic.
The Retirement Equity Lab projects that because of the pandemic, a household earning $100,000 a year would lose $10,000 in annual retirement income, meaning they would have to live on $52,000 per year in retirement, compared to $62,000 before the recession. For older workers earning less than $47,600 per year, “the COVID-19 fallout will push an additional 1 million people from this group into poverty."
A survey from Moneyrates.com found that among respondents between the ages of 45-64, 36 percent said they would have to delay retirement due to the toll the pandemic has had on their finances. That survey also found that 37.4 percent of workers in that age group had either lost their jobs or at least part of their income.
Editor’s Note: A earlier version of this story misspelled Mark Hamrick’s name.