🔒Ageless ambition: Why retirees are re-entering the workforce

Retirement is the well-deserved break all employees strive for at the end of a hard-worked career. While that respite sounds great in concept, the reality is retirees nationwide are reversing their decision and re-entering the workforce. According to asset management company T. Rowe Price, approximately 1.5 million retirees reentered the workforce by March 2022, and this trend continues to grow.

There are many reasons why older professionals are reversing their decisions to stay retired, but financial survival is No. 1. According to Forbes, 48% of retirees polled said they needed to go back to work because of finances. This sentiment was echoed by Hamilton Soriano, a Worcester-based financial advisor for investment firm Edward Jones.

Soriano described inflation as a huge pitfall forcing retirees back to work.

“Things have gotten so much more expensive in the past two years. If you are not sticking to a retirement budget, and things have gotten more expensive, then that expenditure has gotten so much larger,” Soriano said. “In order to make up that shortfall, you have to go back to work. So, retirees are spending more of the money that they had earmarked for retirement, because inflation has made things so expensive.”

Four tips for a sustainable retirement

Choosing to opt back into the workforce is different than needing to go back to work for financial security. Soriano’s job is to make sure his clients have the investments and security to ensure they have the future they want. He shared his tips for a sustainable retirement plan:

• Start investing in your retirement early and often. Even as a young professional, research your employer’s 401ks and match plans, and start building your nest egg sooner rather than later.

• Reach out to a financial advisor for assistance since the process of retirement is not only complex but can be an emotional journey. Having an objective person to help maximize your investments can help you reach your goals.

• Be honest with yourself about how you want to spend your retirement so you can budget accordingly. Do you want to travel? Are you going to downsize? Do you have medical needs?

• Fix a dollar amount to your hobbies and future plans to ensure you have enough to cover both your needs and your wants.

Ultimately, planning now can ensure your future retirement. Making a budget and following it can be hard, especially with unexpected life events, medical bills, and inflation.

“Sticking to that retirement budget is important because as advisors, we plan for that number. We adjust for inflation over time,” Soriano said. “We make sure that the investments are performing the way they need to when it comes to retirement, where the draw that we are taking from your accounts makes sense and fits the budget that you've created. If we don't have a dialed in number on that, then that's where issues can arise when you're in retirement. So, sticking to that retirement budget is key.”

Finding purpose and companionship

While finances and healthcare coverage are driving retirees back into the workforce, there is another aspect of working often overlooked: the human component. After decades of working and being around coworkers, retirement can be quite isolating and lonely. As a result, older individuals might opt back into a job or find a volunteer position just to be around people again, said Jim Metcalf, who works as a mentor for the Worcester County Chapter of SCORE, an entrepreneur advisory group.

“Many of us live alone, especially after a spouse dies, and so we can go for days without ever talking to anybody,” Metcalf said. “Some seniors seek out a sense of purpose in a job, and a work site can be a place where they can find companionship. This issue of loneliness is a devastating issue for older people and finding a job can be a solution.”

Ageism is one major obstacle older individuals seeking to re-enter the workforce face. Metcalf said because of insurances and liability, bigger corporations are more risk adverse to hiring older individuals, even if they are capable of doing the job. In Metcalf’s experience, older people looking for work are more welcomed by small businesses willing to give them a chance.

Labor shortages and declining birth rates are changing the role older workers play in the workforce, said Metcalf. After the coronavirus pandemic, all industries are still experiencing crippling worker shortages. Hiring older workers who are already skilled and have work experience could be one solution to mitigate the problem.

“With all these external factors, there might be lower numbers of potential good employees, so turning to older employees to sub in until the workforce is stabilized by the younger generation could work,” Metcalf said.

Metcalf has seen an increasing number of companies contact retired employees and ask them to come back to work because they are having trouble finding other workers with the expertise and training they are looking for.

“Older employees, especially retired employees, are being called back because they know the business. They've been there. The company trusts them, they trust the company, and they have a sense of loyalty that is engrained in the company that they are having trouble finding in other workers,” Metcalf said.

Whether for financial survival or to find a sense of purpose, one in three retired Americans are going back to work, according to data from online temporary worker firm Indeed Flex. Regardless of the reasons, older professionals re-entering the workforce are changing the business landscape.

“Senior workers almost have a sense of ownership in a business, a sense of pride, and they are here to work,” Metcalf said.