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The Unretirement Problem

At the beginning of the pandemic, many decided to take early retirement. The news was full of stories where people accepted buyouts and left the workforce earlier than expected.

Since then, as many as 3% of retirees have decided to go back to work. 

Many who retired at or near the beginning of the pandemic have found themselves in a double whammy. After spending years paying off their mortgages, doing budgets, and planning their retirement incomes, the floor fell out from under them.

First the stock market dropped 20%, then inflation ate into their purchasing power. If you look at the two years of inflation we’ve had since and including July of 2020, the inflation rates total 14.9%.

No matter how you count it, that’s horrible. For many retirees in a tight job market, the answer was to re-enter the workforce.

One of the problems happened if you were over age 62 and filed for Social Security. If you earn what they consider to be too much money, they begin withholding either a portion or all of your monthly benefits.

This happens not only to W-2 earners, but also to gig workers and entrepreneurs. Once your income is reported on the following year’s tax return, when you earn too much, your monthly check will be adjusted.

This occurs from age 62 until you reach the full retirement age of 66 or 67 depending on your birthdate. At that point, any unpaid benefits will be added back into your monthly check. The way it works is they withhold $1 out of every $2 on the amounts you earn of $19,600.

And there’s absolutely nothing that can be done about it.

Let me leave you with this.

Many have asked what the exact age is when they should put in for their Social Security benefits. The answer is a simple matter of mathematics, if you know when you’re going to pass away.

Other than that, it’s nothing more than guesswork.

Let’s face it. The biggest worry all retirees have is outliving their money. What has happened in the past couple of years to retirees is almost a perfect storm.

It’s an extraordinary argument for not retiring early, but there’s another.

One of the saddest things I’ve seen in my capacity as an accountant is a phenomenon that doesn’t have an actual name. It’s the concept that many Entrepreneurs die within 12 months of their retirement. We spend so much of our lives being in charge, that when we aren’t, our bodies just don’t know how to handle it.

Some of this can be explained by many who work well into later life. They hit a point where they can’t physically do it anymore, retire, and earn their heavenly reward quickly.

But that doesn’t explain the Entrepreneurs I’ve known for thirty years, who retired in their mid-sixties in the peak of health. Many went to sleep one night and just didn’t wake up.

Those who don’t do what we do, act like it’s easy, but heavy is the head that wears the crown. For many like me there’s no choice, because if you aren’t the lead dog in the pack, the view in this life never changes.

What we do isn’t just a job. It’s quite obviously a life. 

What’s the answer? No clue. I haven’t the foggiest.

But recognizing that this happens to many may be enough. Understanding the problem may be the cure for some.

*Words from our exceptional leadership