Employers have a lot to contend with these days, especially when it comes to retaining employees and finding qualified individuals to fill job vacancies. Not only are there a growing number of younger employees quitting their jobs in the midst of “the great resignation,” but also the gradual labor market recovery from the pandemic has been accompanied by an increase in retirements among adults ages 55 and older. Likely you, a family member, friend, or co-worker is among them.
Why is this important?
Thankfully, from a wealth standpoint, many older individuals making retirement decisions now are in remarkably different financial situations than millions of older adults who were forced to make difficult lifestyle choices during the Great Recession from December 2007 to June 2009. During that period both the value of financial assets as well as home prices plummeted. As a result, many older workers had little choice but to postpone retirement and stay in the work force in order to rebuild their nest eggs.
At this point it’s unclear whether the recent pandemic-induced increase in retirement among older adults is a temporary or longer-lasting phase. Newly published labor force projections from the U.S. Bureau of Labor Statistics suggests it will be temporary.
With younger adults also resigning their jobs for a variety of reasons – from seeking better work/life balance and caring for elderly or young family members, to starting their own business or finding a job that pays more money – many jobs likely will remain vacant for some time as companies struggle to figure out just what the “new normal” is for America’s work force.
So how do you adjust to your new circumstances?
First, no matter your age or how you got to where you are today, take a minute to breathe. Take inventory of what just happened to all of us the past few years. Right now, you may be tempted to make snap decisions regarding your ‘unplanned’ retirement, or second guess your ‘great resignation’ move and jump into the next employment opportunity as soon as it comes along. The best course of action? Stay rational – and consider your next steps carefully.
Here are three tips you might find helpful in figuring it all out.
(1) Separate wants and needs. First on the list, take a close look at what aspects of your life and lifestyle are really necessary and those that are expendable. Likely this will not be an easy exercise – and perhaps a bit painful. As we get older and become more ingrained in our lifestyle, the lines between wants and needs can become quite blurred. Determining what you truly need is the first key to ensuring a prosperous life change or retirement, even if you weren’t exactly prepared for it.
(2) Seek professional guidance. Next, it will be worth your time, and possibly your money, to get professional guidance as you embark on this new phase of your life. Here are some important aspects to discuss with your qualified financial advisor:
(3) Implement non-financial keys for a successful future. Once you have the professional guidance you need, it’s time to make a few other choices. Here are some non-financial considerations to help guide you as you press forward:
- Spending. Take a good, close look at your budget. Again, determine what you need, what you want, and what you can truly afford in this new phase of your life. You may discover you have a better idea about the money you have coming in than you do about where it’s going after it hits your bank account. But coming to terms with your true expenses is the first real step in preparing for your future. Working with a financial professional is a great way to assess your budgeting and spending habits, and it could be pivotal to your overall financial success.
- Investment allocation. Have a qualified portfolio manager give you an honest evaluation of your current investment holdings and allocation. During the economic recovery it seems almost everyone wants to invest and experience growth in the stock market. The key question to ask is this: “How much equity risk can you afford to take to balance the prospect of returns versus how a market downturn could impact your finances?”
- Income. Consider your prospects for income and, again, determine if any additional money is needed to support your lifestyle going forward. True, this may require going back to work on your own terms or for a limited time. However, there are other ways to put your savings to work, e.g., exploring alternative investments, starting your own business, leasing rental properties, and purchasing an annuity.
- Back to work – or not. As mentioned above, the big question looming for some individuals is, “Will I have to go back to work at some point?” It seems the older we get, the more emotional this decision becomes. Working with a trusted advisor can help you put the emotional aspect of this decision in perspective to help you make sure you have enough money to live the lifestyle you’ve chosen and desire.
- Set proper expectations. Chances are you’ve already learned that life often turns out differently than you planned. As we emerge from the pandemic into economic recovery, keep in mind change may be our constant companion for a while. For example, if you should decide to take a new job down the road, it may not pay as much as your old job – or you could be working in a hybrid environment. If you retired to see the world, travel plans may have to be tempered. Your new lifestyle may be different than expected, so it’s best to understand what those expectations should be in the near future.
- Keep busy. Regardless of whether or not you go back to work, it’s important to stay busy and active. Even volunteering, while not giving you an income, helps you donate your time to worthwhile causes – with the added bonus of keeping you distracted from spending money.
- Stay healthy. As always, take the necessary time to keep yourself mentally and physically healthy. Doing so will have a positive effect on other aspects of your life and will make this stage of your life even that much more enjoyable.
- Stay positive. Last but not least, maintain a positive outlook on life. Look at this period as a time to do things you just didn’t have the time or energy to do before. Surround yourself with positive people – making a positive impact on their lives and your life alike may have you wondering why you didn’t make this important life choice much earlier.
Don’t lose sight of your ultimate goal
We are here to help you through this emotional and exciting time of your life. Contact us today to learn how Commerce Financial Advisors can help you evaluate your current financial situation and create a plan for living the life you want now and the one you dream of in the future.
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¹ Richard Fry, Pew Research Center, “Amid the pandemic, a rising share of older U.S. adults are now retired,” https://www.pewresearch.org/fact-tank/2021/11/04/amid-the-pandemic-a-rising-share-of-older-u-s-adults-are-now-retired/, Nov. 4, 2021.
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