Nearly one in three American retirees are considering working temporarily and not retiring as the cost of living soars.
Retirement may no longer be the time to wake up and relax. Instead, a growing number of seniors could find themselves returning to the working world when they thought they were done.
An Indeed Flex survey of U.S. seniors ages 62 to 85 found that nearly a third of retirees plan to work one to three temporary work shifts per week.
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At the same time, 42% of working seniors, who have never retired, plan to add temporary work to their full-time job.
So why are so many seniors eager to collect a paycheck from an employer? There are few factors driving this non-retirement trend.
Indeed, Flex said some of the reasons seniors consider temporary work are personal fulfillment, a desire for social interaction and health care benefits.
But there is a major financial problem that is tempting retirees to return to the workforce: inflation. A fifth of seniors surveyed by the temporary employment platform have already returned to work due to the rising cost of living.
“Temporary employment can provide a sustainable, long-term source of additional income,” said Novo Constare, CEO and co-founder of Indeed Flex.
Rising cost of living prompts seniors to seek additional help
Price increases have occurred at a record pace 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 (COLAs) are supposed to protect seniors against these increases and guarantee that they do not lose their purchases. power, these 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 purchasing power of Social Security benefits. The study indicates that Social Security benefits have lost about 36 percent of their purchasing power since 2000. According to the authors, this is because the consumer price index used to adjust Social Security benefits is that of urban employees and office workers. Between January 2000 and February 2023, Social Security COLAs increased benefits by 78%, but the cost of goods and services purchased by typical retirees increased by 141.4%.
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As the real value of their Social Security benefits and retirement plans declines, seniors have no choice but to seek other sources of income, especially since many of them do not hadn’t saved enough to start with. Vanguard revealed that the median balance in its defined contribution plans among those 65 and older was just $70,620 in 2022.
What can seniors do to solve their financial problems?
For many retirees, returning to work in some form will be the best and only decision. If you have little savings and your Social Security benefits don’t extend far enough, it’s better to take a paycheck than to spend down your investment accounts and end up with nothing in the bank later in retirement when working becomes more difficult.
Tutoring, counseling, pet sitting, and food delivery are some of the side hustles that can be ideal for seniors who have knowledge or free time to contribute. Apps make it easier than ever to find flexible work around your schedule, or you can contact your old bosses and co-workers to see if there are any part-time opportunities in your old field. A growing number of companies have adopted flexible or remote working, so you may not even need to leave your home to do it.
Other options for those who can’t or don’t want to retire might include moving to a less expensive area to live in, choosing a more aggressive mix of investments in your portfolio (although this carries some risk additional) or reducing and releasing your home equity to reduce your home equity. the cost of housing and increasing your savings account, although this can be difficult.
The important thing is to act quickly if you know your accounts are at risk of drying up, because 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 considered advice. It is provided without warranty of any kind.
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