By Alessandra Malito, MarketWatch
Nearly 17 million people have become unemployed in the last month as a result of coronavirus-linked shutdowns and slowdowns. It’s a scenario that could be detrimental to anyone’s finances, especially if they’re nearing retirement.
At least 1.2 million people age 55 and older were unemployed in March, up from just about 1 million in February, according to seasonally adjusted figures from the Bureau of Labor Statistics. The unemployment rate, which is the number of people in the workforce divided by the number of those who are unemployed, for this demographic was 3.3, up from 2.6 the month before. But these figures are preliminary — the numbers are based on the BLS Current Population Survey of households, which is based on a monthly survey of 60,000 households conducted until the middle of each month.
“It’s very hard for people to lose their jobs when it’s not on their own terms,” said Nate Wenner, principal and a senior financial adviser at Wipfli Financial Advisors. “People have this idea of how they’d like to end their career and under what circumstances.” Not everyone can afford to exit from the workforce entirely when they’re just a few years out from retirement either, he said.
Losing a job is always a stressful situation, especially during a health crisis, but it can be particularly devastating for individuals close to retirement. This demographic is more likely to suffer age discrimination when looking for a new position, they may still need health care coverage after being unexpectedly separated from their employer and they may still have years to go until they have saved enough for their retirement.
The coronavirus has caused companies across the country to shutter, including concert venues, sporting events, restaurants and retail stores. Initial jobless claims have increased 3.3 million, then 6.8 million, followed by another 6.6 million in the last three weeks, beginning in the middle of March.
Weekly statistics show how dire the situation may be for many more Americans.
According to the weekly updates, about 1.5 million more people were jobless for less than five weeks, bringing the total up to 3.5 million in March for that group. Another 1.4 million worked part time, instead of full-time as they would have preferred, for a total of 5.8 million last month. They were working part time because their hours had been reduced or they couldn’t find full-time positions, the BLS said .
Here’s what financial advisers suggest Americans do if they’ve lost their jobs but aren’t ready to retire:
Figure out your financial situation
Workers need to assess where they stand financially, so that they can know what it takes to retire. Thomas Duffy, a financial adviser at Jersey Shore Financial Advisors, suggested asking a few questions, the first of which is: Can you maintain your lifestyle without working?
If the answer is yes, determine all sources of income, what health insurance will be used until Medicare kicks in, any major expenses coming up (like a wedding, trip or home renovation) and how inflation may impact cash flow in the next five to 20 years. Also, what are the unexpected expenses that may arise, like a broken down car or a roof that needs to be replaced?
If the answer is no, individuals should still figure out what their cash flow needs are, but also research benefits they’re entitled to and determine expenses that can be eliminated for the moment. Workers of all ages should also consider how much in salary they’d be willing to accept at a new job, he said.
The government’s recently passed stimulus package, known as the CARES Act, expanded unemployment benefits. Under the $2 trillion package, part-time and self-employed workers, including gig workers, are eligible for unemployment benefits, and state benefits are boosted with an additional $600 a week. Anyone whose workplace was closed due to the coronavirus crisis, who had to quit their job because of the disease, or who were supposed to start working but the job fell through because of the crisis are covered. Family caregivers also qualify.