Retirement may no longer be a time to kick back and relax. Instead, a growing number of older people may find themselves back in the world of work after they thought they were done
A survey of American seniors between the ages of 62-85 by Indeed Flex found that nearly a third of retirees are considering working one to three shifts of temporary work per week.
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Meanwhile, 42% of working seniors who have never retired consider adding temporary work to full-time work.
So why are so many seniors eager to collect a paycheck from an employer? There are few factors driving this trend of not retiring.
Indeed, Flex said some of the reasons seniors are considering temp work are personal fulfillment, a desire for social interaction and health care benefits.
But there’s one big financial issue driving retirees back into the workforce: inflation. A fifth of seniors surveyed by the temporary staffing platform have already returned to work due to the rising cost of living.
“Temporary employment can serve as a sustainable and long-term source of additional income,” said Novo Constare, CEO and co-founder of Indeed Flex.
The rising cost of living has seniors eager for extra help
Price increases have occurred at record rates in recent years. The average inflation rate was 4.1% in 2023, 8% in 2022 and 4.7% in 2021. While Social Security’s cost of living adjustments (COLA) are supposed to protect seniors against these increases and ensure they don’t lose purchasing power , those COLAs are not useful for protecting the value of retirees’ savings and investment accounts outside of Social Security.
Data from the Senior Citizens League suggests that even COLAs fail to maintain the spending power of Social Security benefits. The study says that Social Security benefits have lost about 36% of purchasing power since 2000. Its authors argue that this is because the Consumer Price Index used to adjust Social Security benefits is for urban earners and clerical employees. Between January 2000 and February 2023, Social Security COLAs increased benefits by 78%, but the cost of goods and services purchased by the typical retiree increased by 141.4%.
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As the real value of their Social Security benefits and retirement plans decline, seniors have no choice but to look for other sources of income, especially since many had very little savings to begin with. Vanguard found that the average balance in its defined contribution plans among those 65 and older was just $70,620 in 2022.
What can seniors do to fix their money problems?
For many retirees, returning to work in some form will be their best and only move. If you have little savings and your Social Security benefits don’t stretch far enough, it’s better to take a paycheck than drain your investment accounts and end up with nothing in the bank later in retirement when the going gets tough.
Teaching, consulting, pet sitting and food delivery are among the side hustles that can be ideal for seniors who have knowledge or free time to bring to the table. Apps make it easier than ever to find a job that fits your schedule, or you can reach out to old bosses and colleagues to see if there are part-time opportunities in your old field. A growing number of companies have embraced flexible or remote working, so you may not need to leave the house to do it.
Other options for those unable or unwilling to retire may include moving to a more affordable area to live, choosing a more aggressive mix of investments in your portfolio (although this carries additional risk), or downsizing and unlocking home equity to lower the cost of housing and grow your savings account, although this can be difficult.
The important thing is to take quick action if you know your accounts are at risk of drying up, as the longer you live beyond your means, the harder it will be to have stable finances throughout your retirement years.
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This article provides information only and should not be construed as advice. Offered without warranty of any kind.
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