Older Americans Returning to Work

April 15, 2012 Senior Financial Issues

Much of the job growth we see across the nation appears to be that of older Americans who are remaining in or returning to the workforce, not merely as a means to keep busy in their golden years, but rather due to necessity as a result of a multitude of factors related to the financial crisis and real estate bubble. To better understand the scope of senior hiring over other demographics, total all-inclusive payrolls for all workers have declined since the recession which started in December of 2007, but for the 55 and above crowd, employment is actually up since that time by 3.9 million jobs.

We normally don’t think of senior or retired individuals being hit so hard by a recession.  After all, typically a senior’s working days are usually over at the age Social Security normally kicks-in sometime between 66 and 67 years old.  Or they may be on pensions, and are typically thought to have acquired significant savings to get them through their retirement years.  But recent indications in the employment market are seeing the trend change.

Given a confluence of negative economic issues, senior individual’s retirement plans many times are not good enough to maintain a comfortable lifestyle any longer.   Some have found their savings evaporate as a result of the need to dig into their savings.  Others may have experienced losses in the stock market back at the beginning of the crash that essentially wiped-out their retirement altogether.

With the economy in such shambles and the Federal Reserve keeping interest rates at an all-time low, seniors find it impossible to locate an interest-bearing bank account with any rate numbers of substance.  Only a few years ago, time-deposit accounts for CDs were yielding interest rates of 5 or 6 percent or even higher depending on the financial institution.   Seniors with a significant measure of savings were able to supplement their Social Security checks with these rates of years-gone-bye.   Certainly, today’s rates of 0.5% to 1% at maximum are inadequate to barely pay for account fees and penalties, no more provide supplementary income.  Financial security is more difficult than ever for seniors in today’s world of recession, housing value bust, financial sector collapse and Federal Reserve quantitative easing policies.

For seniors considering a return to the workforce, it may be comforting to know that many employers prefer to hire older workers as they know seniors tend to be extremely dependable and possess great work ethic and integrity. Seniors tend to have tremendous knowledge and wisdom from many years of personal experience and emotional growth thereby requiring less training.  For many jobs dealing with the public, seniors tend to be very tolerant and compassionate, promoting a good client/business relationship along with returning customers.

Seniors thinking about a return to the workforce should carefully consider a multitude of issues related to returning to the daily grind.  First thoughts should include the type of job being considered and the physical or mental demands on the individual considering their health limitations.  If an senior is considering returning to work, a discussion with the individual’s doctor is always advisable in order to ensure there is a limited risk of a medical situation.

If a senior is on Social Security, some thought and research into the tax consequences on their SS benefits should be considered. Income taxes may apply on part (either 50% or 85%) of a senior’s benefits if they make over a certain amount of money per year.  This amount varies each year and is dependent on whether filing separate or joint.  If a SS beneficiary starts taking early SS benefits sometime on or after their 62nd birthday and before the full benefit age of 66 to 67 (dependent on their date of birth), there may be additional reductions and/or penalties taken from their SS benefit checks each month.  These details should be discussed with a financial advisor and understood thoroughly prior to working for a paycheck again.  All of the rules regarding Social Security rules on tax issues and penalties are available on the Social Security Administration website at http://www.ssa.gov.

There may be other options for seniors rather than rushing to take a job.  These may include a reverse mortgage (if they own their own house), applying for food stamps of Supplemental Security Income, or downsizing their residence.  Due to the poor economy, many seniors are moving-in with their children and their families in travel trailers or granny house residences built on the properties of their children.  This sharing of housing and living expenses is helping not only seniors make ends meet but the children of these seniors make it through these tough times.

We live in changing and challenging times.  While we know bad times don’t always last, we are currently in an extended period of downturn that requires creative and sometimes difficult decisions.  Being well-informed and making well thought-out decisions is crucial in today’s world.