Retirement looks a little different for everyone, but it remains a milestone for most Americans. Unfortunately, the pandemic has been wreaking havoc with plenty of life’s major markers, including going back to school, getting married and, yes, kicking up your feet after decades in the workforce. Here are a dozen things many people look forward to in retirement, and how the coronavirus is at least temporarily changing the game.
First things first: For many, the pandemic is making full retirement itself a mere dream. A July survey by SimplyWise has found that 72% of respondents said they were planning on working in retirement, a significant uptick from 67% in May. Likely driving those numbers: A widespread decline in income, with only 58% of those surveyed saying they are making at least as much as their pre-pandemic wages.
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While plenty of would-be retirees will stay longer in the workforce because of the pandemic, others are leaving earlier than they anticipated. "A lot of government workers, teachers, police officers, have taken early retirement now," says Paul Miller, CPA and managing partner with Miller & Company. "They haven’t been given an incentive, they just feel they don’t want the risk of working, either in a hostile environment or risky health environment. I can't tell you the number of calls I have gotten, inquiring if I retire, what will my taxes look like, or what should I be paying attention to." Still others have been pushed out. According to SimplyWise, one in five seniors have been furloughed or fired because of the pandemic.
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Plenty of retirees take part-time jobs or volunteer positions to reduce expenses, stay busy, or both. The problem: Many of those positions — think cashier, substitute teacher, delivery person, and the like — require a lot of contact with others, something at-risk seniors need to minimize right now. Because of this, "there is likely to be a boom in the employment of the young, at the expense of employment of the old," says Michael Barry, president of O3 Plan Advisory Services in Chicago. While some retirees may be able to transition their skills to telework-friendly jobs, it's more likely that many looking for casual work will be sidelined for a while, he says.
For many retirees, leaving the workforce also means getting rid of the big, empty house that they no longer have the time or energy to maintain. But pandemic-related uncertainty, especially in the housing market, has led some seniors to pump the brakes, says Deborah Heiser, an applied developmental psychologist who specializes in mid-life and aging. "I have seen a reluctance to make any move, downsizing included," she notes. Additionally, more seniors are considering reverse mortgages to give them more financial flexibility during the pandemic, according to Ryan Whittington of American Advisors Group. One of the many pitfalls of a reverse mortgage, however, is that seniors no longer have the option of moving out long-term, including to downsize.
Financial advisers have long preached the folly of tapping a 401(k) early, and most workers approaching retirement age have taken that as gospel. However, the pandemic has left many with little choice. SimplyWise’s July survey found that 23% of respondents in their 50s were planning to take money from their 401(k), up from 14% in May. The federal CARES Act has waived the normal 10% penalty on individual withdrawals for the remainder of 2020, but most financial planners agree that tapping retirement accounts should still be a last resort. Even those who won’t dip into retirement funds may not contribute as much as they’d planned, prioritizing building a better emergency fund instead.
Another common retirement dream: A completely empty nest, with grown, self-sufficient children finally making their own way in the world. But as the pandemic has shuttered colleges and forced layoffs in a myriad of industries, young adults have been coming home. "I have seen more grown kids, and grown kids’ families, moving in with parents," Heiser says. "Not just for the sake of the children but because it allows them to go outside and feel safer during the pandemic." And while this can make for some welcome togetherness, it can also lead to discomfort and resentment for some families.
For retirees who don’t have children coming home to stay, the opposite situation holds true: Plans to spend more time with children, grandchildren, and other family members have been thrown for a loop because of social distancing guidelines. "For the families that I work with to plan and prepare for retirement, it hasn’t been a devastating blow to think about the loss of travel or dinners out as much as it’s been the inability to see grandchildren, graduations, weddings and other loved ones," says Kyle Hart, founder and lead financial planner with Coastal Wealth Planners. "That has been the most upsetting part of COVID-19’s disruption to their retirement."
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The pandemic has made retiring abroad complex at best, and impossible at worst. Marco Sison, who writes about international retirement at Nomadic FIRE, retired five years ago. Earlier this year, he attempted to establish a home in Spain, only to see his dream dashed when Spain locked down and halted visa applications because of COVID-19. Financial instability has also thrown a wrench in plans. "The rough few months in the stock market at the beginning of the pandemic convinced me that we would be in for an extended economic rough patch," he says. That led him to a new retirement base in Turkey, where he says he is still able to obtain a visa and, more importantly, whittle down his living expenses. Rounding out the concerns: Access to health care abroad, which is becoming more of a concern during the pandemic and luring some retirees back to the States.
Even when retirement abroad isn’t in the cards, most retirees look forward to filling some of their free time with travel. Of course, right now that’s mostly on hold. The CDC warns against non-essential international travel for everyone, not just seniors, and notes that those who do opt to leave the U.S. may have to remain outside the country for longer than they intended because of ever-changing travel requirements. Sison, for instance, says a trip to Austria for a family baptism will require him to hopscotch through three countries, quarantining for 14 days at one point and relying on his dual citizenship (he also holds a passport from the Philippines) to make the trip.
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Before the pandemic, many seniors associated retirement communities with built-in socialization, activities galore, specialized health care, and in some cases, outright luxury. But retirement communities, particularly vulnerable to COVID-19, may have temporarily lost their luster. "Visitor restrictions, changes in dining and wellness activities, changes in home health care services, and restrictions on gatherings within the communities have all served to remove many of the main qualities that brought residents there in the first place," says Jake Sadler, a certified financial planner with Woodstone Financial in Asheville, North Carolina. "The day-to-day reality of a life in a retirement community now looks different than the dream which many retirees had of what their experience would be like."
Believe it or not, for some seniors, cruise ships are a cheaper alternative to retirement communities. But the COVID-19 outbreak aboard the Diamond Princess earlier this year shows just how vulnerable cruise ships can be to viral spread. More than 700 of the 3,700 passengers and crew members tested positive, and a dozen ultimately died. Right now, the CDC has extended a No-Sail Order until the end of September, keeping all cruise ships from sailing.
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Cruisers' land-based counterparts also count a high number of retirees among their ranks, many of whom have ditched any semblance of physical residence for the budget-friendly adventure of living on the road. But the pandemic has thrown many full-timers for a loop, exposing how hard it can be to get health care on the road, making frequent runs to the store much more risky, and making spots at campgrounds and RV parks harder to get as facilities close, either temporarily or permanently.
