Older? fixed pension? Inflation a bother? Investments down? Forget those golden years.
More seniors are getting back to work. A decades-high inflation rate and retirement savings gouged by the falling stock market are forcing many to work to make ends meet. Example: Medicare premiums rose sharply, cutting into the large Social Security cost-of-living increase. The basic monthly premium will jump 15.5 percent!
The US workforce is nearly back to pre-pandemic levels, but the participation rate -- the share of the overall population that’s either actively working or looking for a job -- has remained depressed.
“I can’t imagine life without work! Well you’re getting your wish! Those ages 75 and up are the only age group whose labor-force participation rate is projected to grow over the next decade, although their base is smaller. The number of workers in that age range is expected to jump nearly twofold by 2030, when nearly 10% of the civilian labor force will be older than 65, according to the Bureau of Labor Statistics.
After a dip during the pandemic, BLS data from June already show rising employment among older Americans. There were more employed people ages 55 and over -- the baby-boomer generation -- last month than at any time in 2021. Within that age bracket, the number of full-time employees, defined as working at least 35 hours a week, is hovering near the highest in data back to 1986.
People were already working longer for several reasons, especially greater life expectancy. Now inflation running at 9.1% -- largely driven by higher costs for food, gas and shelter -- has drawn more in. Not only is that hammering seniors on fixed incomes, but it’s also eating into the retirement savings of those who were able to stow money away.
Pensions aren’t helping.
If you work long enough as an elite with a big company, you probably have a juicy pension from the private sector. Those, once plentiful, are now rare in favor of ‘defined contribution’ plans where you do all the contributing and whatever you’re left with is what you have to live on. How about the last redoubt of a bygone era—public pensions? Not only are Medicare costs rising, but US public pension funds are on pace for their deepest financial setback since the Great Recession as turmoil in global markets this year threaten to leave taxpayers and government workers on the hook.
For example, steep stock and bond losses are set to leave state and local pensions this year with enough to cover 77.9% of all the benefits that have been promised, down from 84.8% in 2021, according to the New York-based nonprofit Equable Institute. That reflects almost a half trillion dollar increase in the gap between assets and what’s owed to retirees. The biggest US fund, the California Public Employees’ Retirement System, said this week it lost 6.1% , its worst performance since 2009.
Public funds lost about 10.4% on average in 2022, according to Equable Institute, as surging inflation and growing fears of a recession hammered the bond market and drove stocks to their steepest quarterly decline since the first wave of Covid-19 in early 2020. The losses pared about half of the outsized 25% gain funds saw on average last year as monetary stimulus helped markets rally during the pandemic.
When pensions miss their assumed annual return targets -- about 7% on average -- states and local governments have to increase funding or cut costs by raising employee contributions or freezing cost-of-living increases.
The unfunded liability of public pensions is projected to climb back to $1.4 trillion in 2022.
Losses in the second quarter left state retirement systems with assets sufficient to cover 70.1% of promised benefits, down from 81.4% the quarter prior.
Public pensions, which count on annual gains to cover benefits promised to retirees, have increased their allocations to riskier investments in stocks, private equity and high-yield bonds to meet long-term targets. A land war in Europe, inflation, tightening monetary policy and fear of recession of have led to widespread losses in some of those markets. Private equity now makes up more than 10% of state pension portfolios, according to Equable Institute.
Investments? We don’t have no stinkin investments!
Four in five US adults age 50 and over who hold financial products worth at least $10,000 are worried about inflation when they retire, according to a survey published last week by life insurance provider F&G. More than half of pre-retirees said they expect to work part-time in retirement to cover day-to-day expenses.
Even before the pandemic, older Americans were financially vulnerable. A Kaiser Family Foundation analysis in late 2018 found that more than 15 million adults 65 and older, or about one in three, are economically insecure, with incomes below 200% of the federal poverty line. Similarly, 36% of Americans ages 65 to 69 can’t cover one year of minimal care without exhausting resources, per a 2021 study from Boston College’s Center for Retirement Research. That figure is much higher for people without high school degrees, racial minorities and unmarried women.
Employers need more people, and seniors can be worked—to death.
At Seniors4Hire, a hiring platform for older workers, there’s been a 20% increase in applicants since March and about 12% more employers advertising jobs, according to founder Renee Ward. Part-time and lower-wage jobs are common.
AARP, the country’s largest nonprofit, nonpartisan organization for Americans 50 and older, has hundreds of employers advertising jobs on their website.
Barely getting by, it's all taking and no giving…How are the other half—er, 1/1000— doing? In 2021, a record 887 “superyachts”—those longer than 250 feet—were sold worldwide, nearly twice the previous year’s total, with more than 1,000 new super-yachts on order. The number of these megaships that have U.S. owners has grown from fewer than 10 in 1990 to more than 170.
Maybe some of our seniors can become greeters on those superyachts, yah?