As the novel coronavirus pandemic nears its third month, and with layoffs accumulating each passing week, it’s become increasingly clear that the economic fallout of COVID-19 will affect all Americans — although it’s likely some demographics will be hit harder than others.
While economic pangs are quick to affect the job security of millennials, many of whom are now entering the second recession of their relatively short careers, historical lessons from the 2008 financial crisis show that working professionals above the age of 50 have ample cause for concern as well.
The Effects of a Recession on Workers Over 50
In the wake of the Great Recession, more than 27 percent of the American workforce over the age of 50 found themselves suddenly unemployed, according to a study by workforce think tank Urban Institute, a percentage nearly equal to that of millennial unemployment during the same period.
The same study also showed that it took longer for individuals ages 50 to 61 to find new positions, with an average unemployment period of 9.5 months — and upon returning to the workforce, the same demographic saw an average 27 percent decline in monthly wages.
Given the economic hit and widespread shutdowns related to COVID-19, it’s possible such trends will manifest in the labor market once again.
How to Prepare If You’re Nearing Retirement
The decisions of professionals over 50 throughout the COVID-19 pandemic will likely impact their remaining years in the workforce, making this period a key juncture for more than 52 million working Americans.
For those among this demographic closer to retirement, a sudden job loss can feel like an impetus to retire early and begin collecting Social Security benefits.
Individuals weighing this decision need to honestly consider whether they have enough saved in their retirement investment vehicle — whether it’s a 401(k), an IRA, or a pension — to last for the rest of their lives.
With this in consideration, professionals nearing retirement should also factor in how Social Security benefits increase with age, and whether their lifestyle will require additional monthly income in the post-workforce years.
How to Prepare If It’s Too Soon to Retire
Of course, individuals close to 50 have different considerations during a recession. If you're not yet 50, retirement is likely still a decade away (at least).
Professionals anticipating a return to the workforce after COVID-19 has passed should be prepared for the possibility that their earnings may be far less once the pandemic has run its course — and adjust accordingly.
Reexamining one’s budget and monthly expenses should be the first step in this scenario. In terms of career planning, weighing how to “pivot” accordingly, and hone one’s professional skill sets, can also be helpful for those considering possible future self-employment, or some form of secondary “side hustle” to provide supplemental income.
The Bottom Line on Bracing Against the Coronavirus Recession
Moreover, if 2008 has taught us anything, it’s that professionals across the board should anticipate smaller salaries while the economy recovers. Expecting to jump back to full earnings post-pandemic can inadvertently lead to disaster. However, the right amount of preparation in the present can help. To that end, stay up to date on the latest coronavirus news via CentSai’s COVID-19 page so you’ll be ready once it’s all over (and it will eventually be over).