The Great Resignation: Why More Americans Are Retiring Now
They're calling it the Great Resignation. This unprecedented phenomenon is observing numerous Americans leave their jobs—some for greener pastures, others for extended periods, and others for retirement, especially older Americans. While endless columns on this matter have been published, one of the big questions is why it's happening here and now.
The most honest answer is that the Great Resignation is an appropriate response to the COVID-19 pandemic. It's difficult to find anyone or anything that hasn't been affected by the pandemic. While some people choose to stay home because they aren't interested in risking illness to go into the office, the picture is a bit more complex, especially for those with jobs where remote work isn't an option. But there's another factor at play here. It's been a long time coming but hasn't been talked about much because of other more pressing world events.
The Baby Boom Meets the Retirement Boom
These last few years have been a bit different than they were. Reaching retirement age now doesn't mean exiting the workforce entirely. Many retirees start businesses, shift to part-time work, or change their focus from their jobs to working for charities or nonprofit organizations. In 2008, the oldest baby boomers reached age 62.
This shift coincided with the so-called "Great Recession," when the economy declined and perhaps represented a less-than-advantageous time to start retirement. Many people decided to hold off on retiring and wait a few years. In 2021, the economy had distanced itself from those events and faced new developments. Just over half of adults aged 55 or older had exited the workforce and retired. For adult Americans aged 65 to 74, the percentage who had left the workforce was 66.9%, just over two-thirds of this population. (1)
The Great Resignation Catch Up
So, rather than seeing everyone head to the door simultaneously, what we're seeing is a bit of a "catch-up" period. We are looking at a picture of what might have been if the Great Recession had gone differently. The pandemic created a transition period in which people decided it was a natural time to work less, transition to new things, or retire completely, thus the Great Resignation.
The pandemic has gone on way longer than any of us could have imagined, with the more potent Delta variant making way for the more contagious Omicron variant. Examining this context makes it easier to see why someone reaching the end of a long and rewarding career might choose to exit the pattern of working during COVID-19 and parachute into a less stressful, more enjoyable paradigm.
Is the Great Resignation for you?
You might be thinking that this period of mass retirement presents you with an opportunity to cast off the yoke and ease into retirement. Despite the large numbers of people making this big transition, it is essential to remember that moving with the crowd isn't always a justified action.
It's also possible that now is a great time to transition into a different opportunity for your last few years of work. Maybe you have a business idea on which you've been working. Now is a great time to put it into action. Or perhaps you want to transition into a new role at work or with a different firm that will be less demanding when you finally transition into retirement.
If you think now is the time to make changes, Deschutes Investment Consultants will help guide you. We can meet with you, look at your overall financial life and help determine the best course of action. If you are looking to retire, or if there are other plans on your list, Deschutes is here to offer advice and expert feedback on what may be essential to consider financially before you jump in. Whatever may be in your future, our advisors are available to partner with you along the journey.
Get in touch, and let us help you plan for a successful next step.