Why pandemic forced baby boomers to rethink retirement plans

When she turned 65, Wendy Northcross knew she wasn’t ready to retire. When the coronavirus hit a year later, she told the board of the Cape Cod Chamber of Commerce that she’d stay on as CEO until the pandemic was over.

Then came the 20-hour workdays as local business owners flooded in, looking for ways to stave off bankruptcy.

“It was like working a business emergency hospital,” she recalls. “Businesses would come in and you’d triage them. ... I’d be up at midnight to 2 in the morning looking for grants or resources.”

The economy rebounded quickly enough that many of those threatened firms survived. But by October Ms. Northcross was exhausted, and by then it was clear the pandemic would have a lasting effect on the business climate.

“It just gave me clarity that it is actually a good time to step down and hand off to someone with energy and new ideas,” she says.

So on June 30, Ms. Northcross will join the surging ranks of Americans calling it quits on paid full-time work. 

The pandemic has had a profound impact on retirement. For some, it has accelerated plans to leave the workforce. For others, it has delayed those plans. It has increased anxiety about finances for many. And it has forced many Americans to take a good long look at their working lives, their transition to the golden years, and what they want ultimately out of life.

“There are a lot of people who really don’t want to face retirement and sort of push it aside,” says Nancy K. Schlossberg, a retired professor and author of 10 books on retirement and other life transitions. “But now with the pandemic, we really can’t. It’s in our face.”

A surge in joblessness – and retirement

The economic effects are varied but straightforward: When the pandemic hit in March 2020, the economy plunged at a speed not seen since the Great Depression. In a single month – April – lockdowns knocked more than 3% of workers – some 6.2 million Americans – out of the workforce, more than three times the percentage loss in any month in the last 70 years of records. 

Many called it quits. By September 2020, more boomers (generally, those born between 1946 and 1964) had retired in the previous 12 months than in any year since the oldest boomer turned 65, according to a Pew Research report. In all, according to a survey by Fidelity Investments, a Boston-based financial services company, a fifth of those within 10 years of retirement accelerated their workforce departure date, an added deluge to a boomer retirement exodus already known as the silver tsunami.

Others who lost employment or income have had to delay retirement. Fidelity found that more than half of all Americans say they’ll need at least two years to get their retirement plans back on track.

One California entrepreneur was less than a year away from selling his company and retiring in his 50s when the pandemic turned his world upside down. Specializing in live corporate events, he saw sales plunge and had to trim his full-time workforce from 25 to one with a few part-timers to fill in. 

Now, business is starting to pick up again. But as is the case with many small businesses, the firm’s recovery is far more muted than headlines about the overall economy would suggest. “We are slowly starting to add staff back on,” he writes in an email. “Very slowly.”

“I’m excited to work on building the business back in 2022 and 2023,” adds the entrepreneur, who declined to identify himself in print because neither his employees nor his clients know of his plans to sell the business. “We’ll see where things go from there.” 

Right on the cusp between Gen Xer and boomer, he has experience that is far from unique. One of the surprises of the pandemic’s economic impact is that it appears to have disrupted younger generations’ retirement plans more than those of boomers. According to a survey for The Nationwide Retirement Institute, 62% of millennials and 51% of Gen Xers said the pandemic had complicated their finances versus only 27% of boomers.

A future harder to predict

For example, young workers may have to save more for retirement than boomers did. For years, retired boomers were told they could safely withdraw 4 % of their savings every year and not run out of money. “It is now widely agreed that the 4% rule is far too risky a withdrawal rate given rising longevity, exploding healthcare costs, and low market returns,” Olivia Mitchell, risk management professor at the University of Pennsylvania’s Wharton School, writes in an email. Instead, “3% is the new 4%.”

Such challenges have brought increased focus on planning. 

“As many negatives as the crisis had, there are some positives in getting people to really think hard about ‘What do I do if something like this happens again?’” says Eric Henderson, president of Nationwide Financial’s annuity business. “We’re really seeing this more in the millennials. ... They’ve been through in their short working life span two major retractions. [And] a lot of them are saying, ‘You know what? I’ve really got to do a better job of saving for retirement.”

The uncertainty brought on by the pandemic has affected all generations.

Before the pandemic, newly minted septuagenarian Tina Ferguson-Riffe had already lost one restaurant lease because the property owner wanted to develop the property and turn it into a car wash. Now, the barbecue chef and owner of SMOKE Berkeley in Berkeley, California, is worried it will happen again. So she and her son are scouting local properties they can buy, turn into a restaurant on the first floor, and have Ms. Ferguson-Riffe live on the second floor.

The pandemic has complicated that plan a bit, forcing her to switch her restaurant to online orders of takeout barbecue and killing her catering business, which is only now slowly coming back to life. But its biggest impacts were forcing her to confront the need for a sustainable retirement and add more uncertainty to the process. She has already handed over day-to-day operations to her son and is looking for investors to help her buy a property. 

“Everything is just a question of when I have to move,” she says.

Is meaning of retirement changing?

One social impact of the pandemic on new retirees is the isolation.

When college professor Katrine Pflanze of Upper St. Clair, Pennsylvania, retired from teaching on July 1 last year, she felt a giant weight lifted from her shoulders. “July comes around and I’m skating around just like I am on school holiday,” she recalls. “I’m so free. I’m free!”

Then the reality of the pandemic set in: no retirement reception because of the virus; no farewell get-together with her department except for something cobbled together on Zoom. Her plans to take several courses and throw herself into learning German didn’t pan out. This past fall she volunteered for the Biden campaign, but manning a phone bank while isolated at home proved sterile.

Now, “everything is much closer to home and far less out in the community,” she says of her new life. “The last thing that I want is to sit in front of a computer. [Instead], I just love being in the garden. Time can just really go by quickly. ... It took me a while to learn to just allow myself to do the things that I enjoy without feeling super-guilty about things.” 

David Grinstein, a math, statistics, and physics tutor in Searsport, Maine, was already feeling a little isolated when he semiretired in 2018. He gave up his college teaching and in-person tutoring to concentrate on offering help online. When the pandemic hit, most of his other in-person contacts stopped, too. A men’s group at the local Methodist church stopped meeting, as did another group at the Congregational church. His synagogue stopped in-person services.

The pandemic “had a stronger impact than I thought it would,” he says. Looking ahead, “we’re not thinking of anything drastically different than: ‘Oh let’s get back to what we had.’”

Whether it’s possible to go back to a pre-pandemic lifestyle is still an open question.

Dave Schmidt, a Portland, Oregon, physician, had a retirement glide path all worked out. Having stopped working full time at 60, he kept volunteering to help improve the intensive care unit of a teaching hospital in northern Ethiopia. He helped set up a nonprofit to fund global health work. And locally he worked part time as a physician while volunteering at his church. 

“I wanted to make volunteering a big part of my retirement,” he says. “It was a good plan. It was working great until Covid cut it off.”

The pandemic brought all international travel to a screeching halt. Instead of globe-trotting, he and his wife, Jenny, ramped up their backpacking close to home. There were no more volunteering trips to Ethiopia and, anyway, fighting in the north had shut down the hospital program. Dr. Schmidt also had to hit the pause button on the global health nonprofit he helped found, making a hard pivot instead to try to help homeless people locally in Portland. And his church stopped in-person services, so he learned how to livestream its services on YouTube while Jenny became a Zoom master.

For many newly retired Americans, the pandemic has changed some priorities. “Folks are looking at retirement altogether differently,” says Ali Ahmed, director of thought leadership for Fidelity. “They’re looking for newer ways or different ways to fulfill themselves in retirement. And so one of the things that we’ve seen is spending time with friends and family has kind of shot up in terms of the ranking of priorities for a lot of folks. And … we’ve seen folks saying, ‘You know what? Traveling is not as important as it once was.”

The Schmidts remain eager to fly to Australia to see Jenny’s parents, who live there. For Professor Pflanze’s husband, globe-trotting may become more problematic. A biologist, he loved to give papers at international conferences because it allowed him to experience new cultures and food, she says. Now, reduced to talking to his computer where he makes his Zoom presentations from the kitchen, most of the fun has gone out of conferences. And given the convenience of such digital get-togethers, he anticipates fewer in-person conferences going forward.

That will be the challenge for post-pandemic retirees: finding new ways to grab the fun. It’s a work in progress.