Inflation and rising costs are pushing an increasing number of Americans who have already retired back into the workforce, a recent survey said.
Some 12% of Americans said they planned to work again in the New Year, with 61% citing rising costs as the reason, the Resume Builder survey said. Besides inflation, 34% said they planned to return to work because they did not prepare adequately for retirement, 34% need money to help pay debt and 34% planned a return to keep busy.
While inflation is moderating, rising costs have eroded the buying power of Social Security earnings by 36%, according to a study by The Senior Citizens League (TSCL). Older Americans who retired before 2000 would have to earn an extra $516.7 more per month or $6,200 more this year than what they are currently getting to maintain the same level of buying power as in 2000, according to the study.
"Clearly, the driving factor for a majority of seniors returning to work is financial, but this is not the only reason for many," Stacie Haller, Resume Builder's chief career advisor said. "In my own practice, I often meet with retirees who find that they miss the camaraderie of working with others. Many still want to be in the game and are not ready to just 'play golf.' Many are excited about trying something new or something they always wanted to explore."
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Social Security to increase in 2024
Social Security and Supplemental Security Income (SSI) benefits for more than 71 million Americans will increase 3.2% in 2024. Beneficiaries will see an extra $59 monthly starting in January. Increased payments to approximately 7.5 million SSI recipients will begin on December 29, 2023.
The 2024 benefits increase will help millions of people keep up with expenses, according to Kilolo Kijakazi, the acting commissioner of the Social Security Administration. Still, the adjustment is lower than in previous years because of moderating inflation. Recipients received increases of 8.7% for 2023 and 5.9% for 2022, which were the largest since the early 1980s because of record-high inflation.
Since 1975, the Social Security cost of living adjustment (COLA) has been calculated using the CPI, but the index does not survey the costs of retired households over 62. Older and disabled Social Security recipients spend a more significant share of their incomes on housing and medical costs — two spending categories that tend to rise more quickly than overall inflation.
TSCL and other senior advocates have proposed using a "senior" CPI that more accurately accounts for how older Americans spend money to determine the annual COLA and help protect older Americans' income from the impact of inflation.
"If that were the law today, the COLA in 2024 would be almost a percentage point higher — 4%, versus the 3.2% just announced by the Social Security Administration," said Mary Johnson, a Social Security policy analyst for TSCL, in a statement.
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Retirement savings potential dimmed
A "financial vortex" of competing spending – such as credit card debt, college savings, and caring for and financially supporting family members – has reduced U.S. employee retirement savings by 37%, a recent Goldman Sachs Asset Management (GSAM) retirement report said.
These competing financial responsibilities have derailed savings potential and delayed retirement by four or more years for 21% of respondents.
Moreover, only 36% of U.S. workers said they had three months of income or more saved for emergencies. That means that most Americans are at risk of hitting an unplanned and unpredictable speed bump that could push their financial goals off track, despite their best efforts to consistently save when employed, according to Chris Ceder, senior retirement strategist at GSAM.
"While retirement sentiment improved over last year, the financial vortex remains a huge problem for many workers and retirees," Ceder said. "Its challenges are largely immune to improvement in markets and the economy and will continue to impact new generations of retirement savers."
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