Where once workers took advantage of a bad COVID situation to retire sooner than expected, circumstances change, and some may head back to work.
New research from Vanguard finds that the pandemic “prompted an additional 1.6 million workers 55 and older to retire, driven by concerns over COVID-19 and surges in stock and home prices.”
“There are several things plan sponsors can do to help these participants”
The report, The Great Retirement? Or the Great Sabbatical? said these unexpected retirements can put pressure on a participant’s retirement readiness. As a result, some may return to the workforce, whether by choice or circumstance.
As these employees return to the workforce, plan sponsors should consider the effects that the pandemic had on these employees’ retirement savings, according to the investing giant.
“Did they have to draw from their retirement savings earlier than anticipated? Were they planning to take advantage of catch-up contributions in their later working years?” It asks. “There are several things plan sponsors can do to help these participants, such as setting a sufficient automatic enrollment default rate, ensuring employees are immediately eligible to begin contributing to their retirement plan, shortening or eliminating vesting schedules, and providing additional tools, such as advice solutions, for employees seeking extra support.”
The Great Retirement?
According to Pennsylvania-based Vanguard, since the start of the COVID pandemic, “quit rates”—the Bureau of Labor Statistics’ measure of employee-initiated job separations—have surged.
“Many of these workers will remain in the labor force. Some won’t. The Great Resignation now is more likely among older workers to be the Great Retirement.”
Putting more specific numbers to it, the authors wrote that the “red-hot labor market reflected both the U.S. economy’s strong recovery from its pandemic lows and a post-COVID decline in labor force participation. In January 2020, 63.4% of the population worked or was looking for work. Today, that figure is 62.2%, a decline of roughly 2.6 million workers, a phenomenon dubbed the ‘Great Resignation.’ As COVID-19 risks and disruptions recede, some of these workers will return.”