How the pandemic is changing retirement

The pandemic has caused people to reassess their plans for retirement in a number of different ways, depending on their economic circumstances. Some people happily decided to retire early as their priorities shifted away from work, while others were pushed out of the workforce before they felt prepared to retire. And some people who were hoping to retire soon now feel like they have to keep working longer because their financial situation has changed. We hear from listeners and reflect on the ways the pandemic has changed retirement with Bandana Shrestha, state director for AARP Oregon.

The following transcript was created by a computer and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB, I’m Dave Miller. We start today with retirement. The still ongoing pandemic has dramatically reshaped so many people’s relationships to work. Millions of people lost their jobs overnight. Some have had a hard time getting them back. Others, spurred on by a kind of “life is short” pandemic realization, not to mention money in the bank, have chosen to retire early. And then of course, there is a huge chunk of Americans for whom retirement already was and simply continues to be out of reach. We’re going to hear a lot of these stories right now as we take a deeper dive into the ways the pandemic has been affecting retirement,

Bandana Shrestha joins me now. She is the state director for AARP Oregon. It’s good to have you back on the show.

Bandana Shrestha: Thank you so much Dave, great to be here.

Miller: It’s great to have you on. So we asked our listeners over the last week if, and how the pandemic has been affecting the way they think about retirement. We got a lot of voicemails. We’re going to play a number of them in the course of this conversation. We’re going to start with this one.

Shane Throckmorton: Hi, my name is Shane Throckmorton. I have been homeless as a result of COVID, and I’ve been trying to get a place to live for quite some time. It’s been very frustrating because I make a decent income, a decent wage, and I still can’t find affordable housing here in the Portland area, and it’s really frustrating because I’m living in a tent now. So as far as retirement goes, I have no hope to retire anytime soon.

Miller: Bandana, I wanted to start with this one because it puts the entire conversation to come in a really clear or stark perspective. How common is it in the US right now or in Oregon for people to say “I have absolutely no way of even imagining retirement?”

Shrestha: Dave, that was a hard story to start with, but one that is becoming more common. Even before the pandemic, people were already having a hard time envisioning the kind of traditional retirement that people would be expecting to be able to enjoy, let’s say 20, 30, 40 years ago. Since the pandemic, but even before the pandemic due to the Great Recession in 2008, so many people lost so much of their nest egg for retirement, they’re still trying to recover from that. And here in Oregon, as we struggle with the housing crisis, what you heard from Shane, that’s becoming more of a reality, I would say.

Miller: One of the structural issues behind this is something we’ve talked about on the show, but not for a little while, which is the shift away from the old fashioned pension that was a guaranteed benefit,and people would know how much they’re going to get, to either 401ks or defined contribution plans, both of which are tied to the whims of the market. How does that huge shift away from defined benefit pensions play into everything we’re talking about?

Shrestha: I think it plays into it very importantly. When you’re responsible for saving on your own, first of all, you have to make that right choice. And for a lot of people, they don’t have access to even the retirement savings that are not pensions, but are matched by employers and contributed by individuals. AARP did research. And what we know is that middle-income households that are between 55 and 64 have maybe about $144,000. That’s for middle-income families, and that’s just not enough for a secure retirement.

Now, there are so many more people who don’t have access to that. Here in Oregon, knowing that there are a million people who didn’t have access to retirement savings from work, we supported OregonSaves, and it’s a great program, but it’s for the future. It’s for people who are coming into retirement later. For folks who are there right now, you’ve heard the story of how Americans cannot even have $400 in an emergency, let alone retirement savings. And I think the pension issue would be something that would have really helped a lot of people, but we don’t have that.

Miller: Let’s turn to another voicemail.

Terry: I was 65 when the pandemic broke out. I work in the public. I work east of Portland. It was challenging to say the least when neighbors and others were without masks, and cavalier with their behavior. Being in the older risk group, I was ready to quit. Unfortunately I own my own business, and I could not.

Miller: This is interesting because it’s at the intersection of needing to work, as Terry says he owns his own business, he couldn’t stop working, but then also not feeling comfortable with the people that, in this case, his work was putting him in contact with, something that I imagine it’s been relatively common over the last 18 months. What kinds of stories like this have you heard?

Shrestha: That is another real tough situation, isn’t it? Thinking about your own safety and then also on the other hand, your financial security. Interesting that this was a gentleman who talked about his experience coming in contact with a public who is not wearing a mask. In fact, AARP did a survey recently, and it was with women and the impact of COVID, and it showed that for women, there were 62% of currently women who are between 40 and 64 in front line jobs, which means they’re facing the public coming in contact with a lot of people who are wearing or not wearing masks. But I think we hear the story of really thinking about how you secure your own health, but also think about your financial needs. We do hear about it.

Miller: What else stands out to you in this conversation that is really tied to gender? Early on we were hearing so many stories about women in the workforce who were being essentially forced out because in this country, it’s women who take on the brunt or certainly the majority of family work and child care and child rearing, and that had enormous ripples in terms of women in the workforce. What does it look like when you’re thinking about people thinking about retirement?

Shrestha: Women have been most impacted by the pandemic, as well as people of color and lower income workers. And during this pandemic, women have continued that role as family caregivers. When a family member has gotten sick, they’re the ones who are providing care. And for a lot of younger women, they’re also providing care for children who might still be in their schools, and who are doing remote learning. So we talk about the Sandwich Generation a lot at AARP, about women or just generally people in the middle years are impacted by caring for their loved ones who are younger, and caring for older adults. And during this time, that has really come into stark attention for us, as we see women talking about having to care for loved ones, but also older adults who are struggling. And isolation is such an issue, and they’re trying to bridge that gap.

Miller: Let’s listen to another voicemail.

Kim Baller: Hi, this is Kim Baller from Beaverton, Oregon, and I’m calling because as a nurse, I was already semi retired, and with the current COVID problems and how people are treating healthcare providers and just with the risk of COVID, I have opted not to work this year. I do volunteer, giving COVID vaccines however.

Miller: What have you heard specifically from people who work in healthcare?

Shrestha: That’s an interesting story, Kim’s experience, she chose not to serve. I have heard just a whole gamut of different types of experiences. For instance, I know a volunteer that AARP has, she’s down in southern Oregon, and she has actually chosen to work, and she’s probably worked a lot more than she did a couple of years ago. She was in a phased retirement phase. But because of what’s happening in her community, she stepped up and she works to provide vaccines and support her community in that way.

But others have struggled because there is this whole conflict of what’s happening in the hospital, just the pressures that our healthcare providers are facing is immense, and those are personal decisions people have to make. And obviously in Kim’s case she had the choice not to work. But others have stepped up, I have to say. And it’s wonderful that they have, because we need them, we need their work to be able to respond to what’s happening in our communities.

Miller: The flip side of that is older people who may have health concerns of their own, who perhaps decided to leave the workforce before they even felt financially ready to do so, because they were too afraid of putting themselves in contact with people who might make themselves sick, might make them sick.

Shrestha: Yes, obviously there is a whole gamut of different types of choices that people are having to make. One of the main things that we hear is that people have not had a choice. They’ve been pushed out of work. They’re underemployed as a result of the pandemic. Then there are those who you mentioned earlier when we started, people who have left the workforce because they have the financial security and they think, life is short, I’m gonna be able to make this choice, it’s fine and my family’s gonna do fine. And then the other folks who would like to stay in the workforce but have lots of struggles, either they’re underemployed or they’re concerned about health. Like you mentioned, both the gentleman from Gresham who talked about needing to work, but because of his concerns he’s leaving. And then specifically for health care providers like Kim, who are concerned about their exposure. But it is really an individual choice, like the volunteer I mentioned, Geneva, she’s in that category of being in the older population. But still she made that choice. So people are making individual choices.

I think I have a harder time saying, okay, this is a big trend that I’m seeing, in terms of what health care providers are doing, because of their age. It really is individual choices. Where we see trends is related more to how people who are in lower income jobs, people of color, women have been impacted by early retirement and job loss during the pandemic.

Miller: You mentioned the life is short mentality. Let’s listen to two voicemails here that, in their own ways, epitomize that experience.

Tammy Kimball: Hi, this is Tammy Kimball. I’m calling from Portland Oregon. I retired in April from a company I’ve worked at 25 years. I guess the pandemic really clarified what’s important and what’s not, and working every day, spending time away from those I care about most, turned out to not be so important after all.

Kevin: Hello, this is Kevin in Washington state. The pandemic has made me realize that I needed to quit early. I gave up my job of five years working on parking equipment, and I am moving on to a sailboat. Life is too short.

Miller: I have seen various estimates of household finances in different articles, in preparation for this conversation. MarketWatch reported that 56% of consumers are living paycheck to paycheck. CNBC wrote recently that 63% of Americans are doing so. Forbes wrote that 78% of workers are living paycheck to paycheck. Whatever the percentage, not getting a paycheck is obviously not a possibility for hundreds of millions of Americans. They can’t just decide to quit their job and live on a sailboat. How common do you think this is?

Shrestha: Well, it really depends on the individual. Obviously these folks had the financial security, or they were willing to live with a certain amount of insecurity. Kevin didn’t talk about how he was going to be able to make ends meet. If you are able to make ends meet, you can make this choice, but for a vast percentage of older adults, that secure retirement was already a really difficult and aspirational goal that maybe they wouldn’t have been able to reach. And now with the pandemic, with underemployment, with forced early retirement, it’s a hard thing to be able to aspire to, having that retirement. But there are people like Tammy and Kevin who are able to do that. I don’t have a number to put and say how common it is, but I have heard a lot about people saying, “Yeah, if I have a choice, of course I’ll spend time with my family.” As we saw so many people parish during this pandemic. It really puts things in perspective, it really does. But I think not everybody has that choice to be able to say yes, I’m going to go on a sailboat.

Miller: What are the particular challenges for older people who lost their jobs as a result of the pandemic, but want jobs now? I guess the question I’m asking is, how big an issue is ageism in 2021, when it comes to hiring?

Shrestha: Well, ageism is a huge issue, something that we don’t talk about enough in this country, and people don’t think that it is until it happens to you. And in fact, just before getting ready for this, I went looking at what we have heard here at AARP and I have a couple of quotes I wanted to read for you:

“I did not realize how prevalent age discrimination was until my job closed up, and I was 50 years old and looking for a job.” And here’s another one that says “Sadly, capable older folks seem to be one of the last groups it’s okay to discriminate against, even by trendy employers who openly brag about diversity and inclusion.”

I think there is this idea that ageism is something we don’t think about until it happens to us. And people think that if you’re an older worker, you don’t have the skill sets, you’re technologically not capable, and people experience it as early as in their forties. And as you grow older, it’s harder to identify. It may be in very concrete ways that people experience it. And this research that AARP recently did with women, age was one of the factors, the main factor that they reported as the greatest impediment for finding a job. And even in their day to day work.

Miller: Let’s listen to another voicemail.

Simon: Hi, this is Simon from Portland. Yeah, the pandemic has made me think a lot about what’s really important in life and it’s made me think about retiring early. I’m 55, and even though I’m pretty well off and do okay financially from my work, I would love to retire early. But the health care situation in this country makes it so that I’m frightened of doing that.

Miller: Bandana Shrestha, what role does healthcare and health insurance play in conversations about retirement?

Shrestha: Such an important consideration for people as they think about retirement. There’s a term called job lock. Often people end up staying in jobs that they maybe don’t want to because of health costs, health care insurance costs. And here at AARP, we talk about the four pillars of retirement, and health care, health insurance is one of them. The other ones are Social Security, retirement savings, and work. And if you are retirement age, you’re 65, you’re eligible for Medicare and certain portions of your health care is covered. You still have to pay for Part D, for instance. But people who are under 65, and are in that age bracket that Simon is in, their health care costs would be significant. I’ve had another volunteer who retired early at 55, and she ended up paying $1,000 a month for health insurance. That’s not something that everybody is able to do.

Miller: We have time for one last voicemail, let’s have a listen.

Elena: This is Elena calling from Vancouver. I think the pandemic never changed any plans for retirement because I have been too young to even think about that. But my father did retire, and I think it has forced me to think about when it will hopefully, eventually become my turn to do that. Retirement is going to look a lot differently for Millennials and Gen Z-ers than it does for Baby Boomers and Gen X-ers. I think that that’s a reckoning that needs to happen overall in society, thinking about how our world and society is changing, and that includes what retirement will look like.

Miller: Bandana Shrestha, let’s turn briefly to this generational question. What might retirement even look like for people who are in their 30s or younger?

Shrestha: That is a really good question, and I would say that retirement is changing for even those folks who are Boomers, or Gen X-ers, and certainly it will look different for Millennials and folks who are coming in younger. It’s not just the retirement security, it’s not just the financial question, but also, I think our expectation of what we want to do is significantly different. I know the pandemic and the financial insecurities that it has brought on maybe makes people feel like “We are not going to be able to have that kind of golden years of playing pickleball or whatever,” but most people don’t want to ride into the sunset anyhow. People have a strong sense of serving community, a changing perspective on what the four pillars of retirement looks like. Here at AARP, we now talk about community and family, how people are going to spend their time. Those are going to be factors. Financial security is always going to be a cornerstone. We’re going to work longer because we are living longer, and we don’t have pensions like you mentioned before, Dave. So we are going to need to think about retirement savings, shoring up our own nest eggs and really ensuring that we have the resources for a long life.

But also, people want to work differently. They don’t necessarily want to work 9-5 forever for 30 years, and get that golden watch. I think especially during this time of the pandemic and working remotely. our expectations have changed. We want to work differently, and there are innovations that are necessary, but also the market and individuals and generations that are coming forth will also drive that innovation and change in how we want to work and retire.

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