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'It was the lesser of two evils': Workers in their 50s and 60s are retiring early because of the coronavirus pandemic


With just two years until he turns 65, Doug Sheehan was looking forward to a comfortable retirement, dreaming of relaxing evenings spent at restaurants around the Bay Area, splitting bottles of wine with friends.

Then coronavirus hit, and the 63-year-old's plans, like those of millions of others, fell apart. The pandemic has derailed the finances and careers of individuals of all ages, but for many workers in their 50s and 60s like Sheehan, it has also upended their retirement security.

Worried about his own health, as well as the health of his wife and 42-year-old son, who has an autoimmune disorder, Sheehan quit his job as a hotel purchasing manager in March. That disqualified him from collecting unemployment insurance, and, with no other options, Sheehan began taking Social Security two years earlier than he had planned. Visions of a comfortable retirement in the not-so-distant future were replaced with the realities of an under-funded present.

"I didn't want to stop seeing my son," Sheehan says, adding that he helps support him financially. "I didn't want to be exposed in another workplace. I figured the best thing to do was retire. It was the lesser of two evils."

The amount an individual receives from Social Security is reduced if they start collecting it before the "full retirement age," which depends on the year you were born. Sheehan estimates that he has lost hundreds of dollars in potential benefits a month.

"I walked away, and it cost me a ton," he says. "We're surviving, but it's not what I expected in retirement."

Sheehan is far from alone. One of the primary reasons people who lost their jobs as a result of the virus are choosing not to look for new work is because they decided to retire early, according to a recent paper from the University of Chicago.

"Early retirement [is] a major force in accounting for the decline in the labor-force participation" in the early months of coronavirus shutdowns, reads the report. "With the high sensitivity of seniors to the Covid-19 virus, this may reflect in part a decision to either leave employment earlier than planned due to higher risks of working or a choice to not look for new employment and retire after losing their work in the crisis."

And in fact, older workers and near-retirees are over-represented in frontline professions, like janitors and home health aides, that "expose workers to risk of infection and those who are vulnerable to mass layoffs due to the recession," according to an August report from Democrats on the Joint Economic Committee of Congress. 

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Even those who want to work may have a hard time finding a new job, Alicia Munnell, director for the Center for Retirement Research at Boston College, tells CNBC Make It. Older workers already faced age discrimination in the job market before coronavirus.

The good news is that Baby Boomers like Sheehan don't have to worry about coronavirus disrupting their Social Security payments, despite the persistent myth that funding will run out soon, says Munnell. It's younger workers who might receive smaller benefits payments, because there will be less money collected through payroll taxes because of the millions of workers who have been laid off, among other reasons.

"If you're in your late 50s or early 60s, you're going to get grandfathered in," says Munnell. "They would never cut benefits."

After working continuously for over four decades, Sheehan is thankful to have Social Security as a safety net. But he estimates he could have saved another $20,000 for his retirement had he worked two more years at his hotel job. That, combined with the higher Social Security checks he planned on, would have yielded him a comfortable living.

Now, he has no idea what will happen next, or when the economy will rebound. He is willing to go back to work, but he doesn't want to put his family and himself at risk. Trying to plan his finances, or enjoy his retirement with his wife, just isn't possible with all of the uncertainty.

"If 20 years ago someone had told me I would be worried about not having enough money to survive, I wouldn't have believed it," says Sheehan. Now, "I'm not really sure what will happen."

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.