March 2020 seemed like a good time for Wayne Yocum to retire.
The pandemic had shut down broad sections of the economy. Yocum, who was 73 at the time, had spent 25 years as a rental sales manager for a Carmel-based car finance and loan company, and he knew he had several grandchildren to occupy his time.
But as pandemic restrictions loosened the following summer, Yocum grew restless.
“I got tired of retirement,” he said. “I ‘unretired’ because I missed the relationships.”
Yocum went back to work, this time as an independent contractor purchasing damaged vehicles for a fleet company.
His decisions to retire and then “unretire” put him in two unique cohorts: The roughly 2.4 million more Americans who retired in the first 18 months of the pandemic than normally would in that time frame, and the 1.5 million retirees who reentered the U.S. labor market in 2021, according to U.S. Labor Department statistics.
He’s also among the roughly one in five Hoosiers in central Indiana to participate in the labor force beyond the traditional retirement age of 65, according to a 2022 State of Aging report from the Central Indiana Senior Fund. The Social Security Administration, however, is gradually increasing the age at which Americans qualify for full benefits; it will top out at age 67 starting in 2027.
“What we’ve observed for a very long time is a growth in older people working,” said Michael Hicks, an economist at Ball State University who studies labor market trends.
Several factors are contributing to this trend, according to Hicks, one of them being an increase in longevity. People are just living longer. Also, more jobs are less physically taxing than in the past, allowing baby boomers to work well past retirement.
But a strong stock market in the first 18 months of the pandemic boosted the retirement earnings of many Americans, helping to spur the “Great Retirement Boom.” Inflation has since forced some older Americans back to work. Among those considering returning to the workforce, 43% say it’s due to the rising cost of goods, according to a Paychex survey of 930 current and former retirees and more than 200 hiring managers.
While the growth of the number of older Americans looking to work helps some businesses find employees, certain sectors of the economy that traditionally rely on younger laborers—the service industry, construction, health care—don’t benefit as much. Job openings continue to outnumber the unemployed by nearly 4 million.
By 2030, one out of every five people living in Indiana will be a senior citizen, according to population projections from the Indiana Business Research Center.
Some federal lawmakers are taking note. The U.S. Special Committee on Aging released an aging workforce report in May that said, over the past two decades, the share of the workforce age 55 or older almost doubled. By 2028, over a quarter of the workforce will be 55 or older, according to the National Bureau of Economic Research.
Many of those workers are choosing to work part time but are running into problems when trying to work as independent contractors, said U.S. Sen. Mike Braun, R-Indiana, who is urging the U.S. Department of Labor to eliminate a rule that requires a test for determining independent contractor classification.
The test could remove independent contractor status for gig workers such as ride-share and delivery drivers, making them subject to Fair Labor Standards Act restrictions and reducing their flexibility.
“One in three of the new jobs post-retirees are looking at are in the gig economy or independent-contractor jobs,” said Braun. “The Labor Department is wanting to do things that make it more difficult for these workers.”
More baby boomers working could also result in slower wage growth, according to Hicks.
“The growth of labor availability among older workers is certainly going to help businesses, it’s certainly going to help [gross domestic product], but it may not cause that upward pressure on wages that we saw during the early days of COVID,” Hicks said.
Preparing for retirement is as much about deciding how to fill the emotional void left in the absence of a job as it is about financial planning, said Brad Stewart, a financial planner at Indianapolis-based Brunette & Associates LLC.
“I’ve been really intentional about trying to get my clients emotionally prepared for retirement, not just financially prepared,” Stewart said.
“Retirement might seem very attractive, but the reality is, unless they have concrete plans, it can be hard to find purpose after work,” said Liz Malatestinic, a human resources professor at the Indiana University Kelley School of Business. “They miss that interaction and providing value to an organization.”
Employers also need to be aware that more older adults are staying in or going back into the labor market.
Malatestinic said there is a misperception that older workers are less productive.
The truth is a bit more nuanced. While older workers are more likely to take more days off at a time, younger workers are less predictable and more likely to have unexpected absences, which can put employers in a bind.
“What you have to consider is that, by 2025, 25% of the workforce will be over the age of 55, so it doesn’t make sense for employers to ignore 25% of the workforce,” she said.
Companies can better reach this key demographic by posting jobs at senior centers and churches, as well as recruiting websites aimed at older Americans, she said. They should also consider including older Americans in their messaging.
“When you show an older worker as an active part of the group, it sends a message to older potential applicants that they are welcome,” she said.•