COVID-19 Upsets Boomers’ Workforce Exit Plan

Baby boomers wanted to work more years and put off retirement. And save more for retirement. That desire just hit the COVID-19 career wall. Baby boomers’ involuntary retirement starts now. Whether that was the original plan or not. The retirement plan to keep working meets the reality of evaporating jobs. Uncertain employment prospects hit boomers’ retirement timing and income with Thor’s hammer. Boomers’ retirement starts now. Years earlier than many hoped.

Boomers Suddenly Unemployed

The coronavirus emergency yielded 20 Million unemployed Americans. That could escalate to 47 Million unemployed by some estimates. Nothing like this since the Great Depression. If the same percentage of unemployed are baby boomers as in the workforce? That’s 5 Million to 12 Million boomers on the sidewalk. Not working. At the same time, a big stock market hit to IRAs and 401ks compounds the retirement crisis. The sequence of risk fear is no longer a probability but a certainty. Yes, unemployment compensation will help in the short run. But in the long run? We know from 2008 how hard it is for older workers once laid off to come back into the workforce. Over sixty and out of work? Even in a hoped-for recovery, there’s no guarantee that the same workers come back into the same jobs. History says that’s unlikely. The Great Recession left many older middle-class workers stranded. Many older high-income earners found only lower-income, no-growth post-recession jobs.

Boomers Losing Businesses

Boomers that were self-employed or small business owners? They have similar challenges. Do they have the time and resources to rebuild a business damaged or killed by the cure? Or does rebuilding put limited and shrunken savings at further risk of loss? The future won’t be exactly like the past. This is a brave new world. Business owners are going to feel more risk-averse after this black swan event. Accumulating anecdotal evidence shows many businesses shutting down. Not just for the duration of the emergency but for good. The accumulated value inside many small businesses? Up in smoke. Cash is royalty. And other assets are illiquid and plunging in value with uncertainty. Few small business owners have months of cash reserves. Government loans further burden the balance sheet if not forgiven. Extra income or value for retirement? More unlikely.

Can Boomers Come Back and Replace Lost Income?

2020 becomes a lost year of income for way too many boomers. Counting on future income and savings accumulation? That now looks less like a plan and more like a dream. A lot of boomers won’t come back from this. Many boomers’ involuntary retirement starts now.

Don’t allow yourself to get caught up in those things you can’t control, including how the coronavirus will play out. Rather, focus in the months ahead on the large number of things you can control, among them: setting a budget, reducing debt, managing taxes, planning for long-term care and (if you haven’t done so already) timing Social Security to maximize benefits.

I’m not trying to sugarcoat your situation. You and many other new retirees have been dealt a tough hand. But I have to believe better days are ahead.

Glenn Ruffenach, WSJ (updated Add to original post 12/3/2020)

When you can’t control income?

When you can’t control income? The focus becomes controlling expenses. Even if that means changing lifestyles. One outcome of isolation? Enforced austerity. We have fewer opportunities to spend. Or need to spend. Yes, we still need a few things. Food, utilities, and the roof over our heads. But travel? Entertainment? Restaurants? All now prohibited. Even when permitted, they may be no-longer affordable or even desirable luxuries. Simplicity is the new norm. Netflix or Hulu are a bargain. Boomers’ involuntary retirement starts now. And the austerity will continue.

The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.

William A. Ward

Social Security Election

More boomers will elect to draw Social Security now if they are at the minimum age of 62. And starting Social Security now rather than waiting will reduce total lifetime income. But when you need to eat is now? You take what you can get. Again that plan to wait till 70 ½ for the maximum monthly benefit? Shredded by reality. The new conclusion? Elect Social Security now. Give my IRAs and 401(k)s time to claw back value in a post-recession (depression?) recovery.


Boomers already had a strong preference to age-in-place. Even before the coronavirus.

Now? It depends. Is the “place” to age-in paid for? Then, the plan to age-in-place may work. If the operating expenses are not too high. Insurance, utilities, and maintenance matter. Forty-one percent (41%) of boomers own their homes free and clear.

Congregate housing’s attraction is gone. Killed by the concentration of COVID-19 disease and death.

Death concentrated in senior housing and other congregate living. This is a financial brick wall for densely-packed senior living communities. CCRC and assisted living communities’ risk insolvency. They depend upon replacing current residents with new residents and maintaining high occupancy. It’s a tougher sell today. Without new residents? Senior living communities go bankrupt.

That preference of boomers to stay in their current home? Looks smarter by the day. Aging-in-place likely works if you’re in the 41%. Those that own their home debt-free.

involuntary retirement discipline is choosing


The other 59%? Downsizing is the priority. Forced into the market to reduce expenses. A serious round of downsizing housing to meet new income levels becomes a necessity. A mortgage payment that was once affordable when working? May no longer compute. Social Security does not necessarily replace working life income. And a 4% draw on an investment portfolio down 40% doesn’t buy as much either.

My House Is Too Big

The too-big house? All those suburban McMansions? Especially the ones not yet paid for? Lead weights that will drag down real estate values.

But moving down assumes there’s an adequate supply of smaller homes in which to move. Guess what we’ve been building in recent years? Big homes or starter homes? Big. Those post-WWII 1,200-1,800 square foot ranch homes from the 1950s and1960s? May hold their value surprisingly well.

Multi-Generational Housing

One alternative for the too-big house? Look for the return of multiple generations living in the same house. The 1930s is instructive. Many of the large homes were converted to apartments in the Great Depression. The subdivided big homes often first served multiple generations of the same family. The current quarantine reinforces the desire to be together with family. Rather than isolated from family. And if you can’t travel? You at least want to be with the grandkids for retirement. The economic leverage of combining household incomes also helps. Especially in austere times.

Boomers' Involuntary Retirement Man Leaving Work

Relocation? GEOArbitrage?

And our willingness to move to a lower cost locale got a big COVID shove. The glamour of the big city? Not so attractive right now. Boring is not such a bad thing. Just let me enjoy my family. The urban drama? Enough of it. Rural communities’ lower density and more affordable housing now look more attractive. Take that money earned in high-income locations and live in a low-expense location. That is GeoAribitrage.

Expect a reshuffling of baby boomer consumer priorities. How and where boomers want to live? The old world is gone. The coronavirus hammer will leave a mark. A boomer urban diaspora is likely. We need a lower cost of living to make the numbers work. Boomers’ involuntary retirement starts now. The race to reduce expenses is on.

Brave New World Called Retirement

Ready or not, many boomers are now retired. Next, comes the realization. And then the reshuffling of priorities and lifestyle to match income. Are you ready? It’s a brave new world.

COVID induced it. Boomers’ involuntary retirement starts now. The clock is running.


12-3-2020 Wall Street Journal: Forced to Retire? It Might Not Be as Bad as You Fear

The number of retired Baby Boomers rose more from 2019 to 2020 than in prior years

11-18-2020 Pew Research: The pace of Boomer retirements has accelerated in the past year

8-8-2020 MarketWatch: Older workers are disproportionately impacted with job losses during the current pandemic

6-18-2020 AARP: Older Workers May Be Retiring Early Because of the Coronavirus