Impact of Forced Retirement and Loss of Retirement Income on Older Workers

Published on March 14, 2019

A sobering article on ProPublica in December said that more than half of workers in the United States age 50 and older are pushed out of their longtime jobs before they wish to retire. Given the effects of January’s government shutdown, one can imagine the financial hardships that a forced, early retirement may have on many workers and their families.

ProPublica and the Urban Institute analyzed data from the Health and Retirement Study, which, since 1992, has followed a nationally representative sample of approximately 20,000 people aged 50 and up. The study focuses on those with stable, full-time jobs and who have been with the same employer for at least five years. The newest report stated that:

• Fifty-six percent of older workers are laid off at least once or leave jobs under financially damaging circumstances between the time they enter the study (age 50) and when they leave paid employment.
• The number of respondents saying their retirement was forced or partially forced rose from 33 percent in 1998 to 55 percent in 2014.
• Only 10 percent of these workers ever earns as much again as they did before the employment disruption.
• For years, over 50 percent of them suffered with significantly lower household incomes than their peers who did not have their work lives disrupted.
• Another 15 percent reported that they quit their stable jobs after pay, hours, locations or treatment by supervisors deteriorated.

These employment disruptions imply that steady earnings are not a given for many Americans during their 50’s and 60’s. Adding salt to the wound, those lower earnings mean less retirement savings and lower Social Security benefits—especially for those who must claim those benefits earlier than originally anticipated.

With 40 million Americans aged 50 and older who are working, this trend can have very serious effects on their ability to plan for a comfortable retirement. Moreover, with fewer employers offering traditional pension plans, the retirement gap will continue to widen for many people.

While you can’t control your employer’s actions, you can control how you build your retirement nest egg, through self-direction.

If you’re like many Americans who are saving for retirement on their own—with a Roth or Traditional IRA—a self-directed retirement plan at Next Generation can help you build a more diverse retirement portfolio with alternative assets you already know and understand. You can self-direct a Roth or Traditional IRA and include many non-traditional investments not allowed in typical plans, such as real estate, precious metals, private equity, and commodities. If you are self-employed, you can establish a self-directed “solo” 401k or SEP IRA.

Self-directed IRAs have the same contribution limits as their regular counterparts (up to $6,000 in 2019 for IRAs); and, if you are over age 50, you can take advantage of the same catch-up contribution amounts—adding an extra $1,000 a year to your self-directed IIRA. You can open a new account at Next Generation and transfer over from any like-IRA, or roll over from any employer sponsored plan (such as a 401k).

We invite you to learn more about self-direction as a retirement strategy by watching our on-demand webinars or educational videos. We’re sure you’ll have some questions if self-direction is new to you, so email us at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058. We have the answers to your questions about self-directed retirement plans, so you can start taking control of your future, today. Whether you’re in your 50’s or your 20’s, Next Generation is here to help.

As an alternative, you can register for a FREE educational session with one of our representatives.