It’s no secret that the Covid-19 pandemic has hurt workers of all ages.
However, when it comes to older workers – 50-62 and older – some may have fared worse than during the Great Recession, according to a recent study by the Boston University Center for Retirement Research.
How older workers suffer depends on their age group and whether they are aged 50-61 or 62 and older, according to an analysis of data from the current Census Bureau population survey.
According to data from the 50-61 age group, Covid-19 was more difficult for low-income earners than for high-earners.
The data reveal that nineteen percent of the lowest-earning workers no longer worked in 2020 compared to a year earlier. By comparison, during the Great Depression of 2009, 17% of people in that class were no longer at work.
At the same time, 9% of the highest earnings no longer worked in 2020, up from 11% in 2009.
“The big thing that stands out from all the recessions, including the Covid recession, is just the extent to which it hurts more low-income people,” said Geoffrey Sanzenbacher, a researcher at the University of Boston’s Center for Pension Research.
Despite the negative consequences for people in this age group, many did not significantly experience the number of retirees. Part of this may be due to the fact that they are not yet 62 years old and therefore cannot claim social security benefits.
For people 62 and older, it’s a different story.
Low-income people in that age group were still more likely to be unemployed. However, compared to the Great Recession, the unemployment rate was about the same, 38% in 2020 compared to 37% in 2009.
However, high-income people aged 62 and older were more likely to be unemployed. In 2020, 22 per cent of workers with the highest earnings quartiles no longer worked a year earlier, while 18 per cent fell into this category in 2009 during the Great Recession.
High wage earners retired with a larger clip during Covid-19 than during the Great Recession. In 2020, 15% of this cohort retired one year after employment, compared with 10% in 2009. However, the retirement rate for low-income earners remained roughly the same, 26% in 2020 and 25% in 2009.
The results compare data from December 2020 to December 2019. There would probably have been a more dramatic difference in unemployment rates if the data had been measured for previous months in 2020, Sanzenbacher said.
It is true that the health risks associated with Covid-19 disease may have led some employers to encourage employees to retire.
“Based on the data, we can’t really say if it’s a pure choice from the employee or if it’s some kind of joint decision,” Sanzenbacher said.
Because the pandemic will last longer than many expected, some workers who initially identified as unemployed may now say they are retired.
This decision may also make them apply for Social Security benefits early, which is a concern, Sanzenbacher said.
Generally, if you apply at age 62, the earliest age at which employees are generally eligible, you will receive permanently reduced benefits. Ideally, employees will wait until full retirement age to receive 100% of their benefits, or up to the age of 70 to receive better benefits by waiting for their application.
“The best thing you can do to get a high-income retirement is to delay applying for Social Security,” Sanzenbacher said.