Some older workers are retiring earlier than they had planned, a trend that could accelerate if the city provides incentives to encourage them to leave their jobs. While some people leaving the workforce look forward to a life of leisure, others will be forced to scramble for health insurance, dip into savings and receive lower Social Security benefits than they otherwise would have.

Last July, Susan Ruel was working from her Manhattan apartment as a digital manager for a small health-care organization. ”I had been very busy,” Ruel recalls.

Then she and her colleagues were summoned to a Zoom meeting. “They told us that now that they had more information about the state budget, they needed to do payroll cuts and some layoffs,” she remembers. Ruel, 66, a communications professional and journalist, was among them. 

Although the organization had had its ups and downs, Ruel says the loss of her job felt abrupt. In the time since, Ruel has done a lot of political volunteer work, tended to personal business and considered her future. She says she would like to return to paid work but knows that—despite her extensive resume—the economy, her age and changes in her field could make that difficult. “I want to be very selective,” Ruel says.

Nine months into a recession that has cost New York City more than half a million private-sector jobs, many older workers, like Ruel, find themselves out of work and wondering about their futures. Some are retiring earlier than they had planned, a trend that could accelerate if the city provides incentives to encourage older workers to leave their jobs. While some people leaving the workforce look forward to a life of leisure, others will be forced to scramble for health insurance, dip into savings and receive lower Social Security benefits than they otherwise would have.

“We’re going to see more people struggling in retirement in the future,” says Richard W. Johnson, a senior fellow at the Urban Institute. “We’re going to see more inequality in retirement as a result of this.”

The full impact of the COVID-induced recession of 2020 will not be known for years, but, while young people starting their work lives have been hard hit, the economic crisis is also having a disproportionate effect on workers aged 55 or over, particularly Black, Asian and Latino workers and those with less education.

“A lot of people expected job losses this time around would mirror the Great Recession, [when] old people were less likely to lose their jobs,” says Christian González-Rivera, director of strategic policy initiatives at the Brookdale Center for Healthy Aging. But in the pandemic, older workers have been more likely to lose or leave their jobs—losses that can be hard to regain. “Evidence is pretty clear that when an older worker loses their job they are unlikely to get a job at a similar pay rate for a very long time,” he says.

In recessions dating back to 1975, the nationwide unemployment rate for older workers was lower than for mid-career workers. For much of this downturn, though, the trend has been reversed: In the six months from April to September, workers 55 and over had an unemployment rate of 9.7 percent, 1.1 percentage points higher than the rate for workers aged 35 to 54, according to figures compiled by the Schwartz Center for Economic Policy Analysis at the New School. Though unemployment rates have eased since the spring, in November, those over 55 still had a slightly higher unemployment rate than those in the middle of their working lives. 

The discrepancy between older workers and those 25 to 54 is stark, according to Geoff Sanzenbacher, research fellow at the Center for Retirement Research at Boston College. For younger workers in November, “the unemployment rate continued to drop, albeit at a slower rate than the last few months. But, for workers 55 and over, the unemployment rate increased—for men from 5.2 to 5.8 percent and for women from 5.7 to 5.8 percent.” The situation is even more acute for workers aged 65 and over: For them, the unemployment rate in the last year has almost doubled, from 2.7 to 5.3 percent, while their participation in the labor force has fallen, he said.

So far the numbers are only available at national level, but Brookdale executive director Ruth Finkelstein says, “There is no reason to think the data,”  is not playing out similarly in New York City.

In fact, things here may be even bleaker. In October New York State ranked third from the bottom (above only Nevada and Hawaii) in unemployment and the city had an unemployment rate of 13.2 percent, up from 3.6 percent a year earlier and almost double the national rate. 

Retiring early, retiring poorer

The unemployment rate does not tell the whole story because it only includes those currently seeking work and not those who, for whatever reason, have stopped searching. The more striking number when it comes to older workers is the decline in those participating in the workforce at all. Going back to at least 1995, Johnson says, the percentage of older Americans in the labor force has steadily increased. Now, “there is a real question as to whether that trend has stopped or even reversed,” he says, “We’re on pace to see the first substantial annual decline in labor-force participation at ages 65 and older in 36 years.” 

In November 2019, 40.3 percent of people 55 and over considered themselves in the labor force; a year later that had fallen to 38.7 percent. Much of this decline comes from workers 65 and over, according to the Urban Institute: Since the beginning of the pandemic, workers in that age bracket participating in the workforce declined by 6.3 percent, compared to a 2.4 percent decline or less for other age groups. Johnson expects that many of these people have probably left the labor force permanently. 

Some of these workers, like Ruel, lost their jobs, others left voluntarily, and for some it’s a combination of the two. “There is a fine line between quitting and being laid off. Most people prefer to say they quit,” says Siavash Radpour, associate research director at the Schwartz Center. “Right now people are more likely to say they decided to stay home and stay safe.”

Certainly the pandemic has created an especially fraught work environment for older people. “Older workers are more afraid of getting the virus,” Radpour says. “Employers see older workers as more risky since they may get sick.”

While telecommuting erases that risk, older workers—along with the youngest ones—are less likely to telecommute than people in mid-career, often because of the jobs they tend to have. For example, Finkelstein says, may older New Yorkers work in health care jobs that demand face-to-face contact.

Working remotely has allowed Gloria Winograd, a second grade and music teacher at P.S 6 in Manhattan, to remain on the job. “Basically I stay in teaching because I love it so much,” she says. “Teaching is not just what I do, it is who I best am.”

Winograd, who is 68 and has some underlying medical issues, says she would have been unlikely to keep working if she had to go into the physical classroom. (Teachers at risk of contracting COVID-19 because of a medical condition or age are allowed to work remotely at least until the end of this school year.)

Workers without that option, particularly those without a union, may face tough choices. 

“People in the most danger are people in their late 50s” who can’t get Social Security or Medicare, says Johnson, while “people at 62 may be tempted to get Social Security and get a lower benefit for the rest of their lives.”  

A person born in 1958 who retires now, at age 62, would receive 28 percent less each month than if they waited to collect benefits when they were 66 years old. Waiting to collect benefits until age 70 would boost those monthly checks by more than 25 percent.

Many younger, low-income people forced to leave their jobs cannot really afford to retire, Radpour says, so end up on “the margins of the labor force” doing gig jobs, which are risky and “low-paying bad jobs that won’t help them save for retirement.”

Those who received health insurance from their employer and retire before they become eligible for Medicare will also need to find new insurance. Ruel says that this was the biggest challenge she faced after her layoff: She had Medicare for hospitalization but had relied on her employer’s health insurance for additional coverage. With that now gone, she says, “Suddenly I realized I was going to be out of pocket for quite a bit of money every month.” Ruel says her search for insurance offered “a great lesson in how complex this is and how much tenacity is required to figure this out.”

Paid to leave

Some unions and political leaders are seeking to make the hard choices a bit easier.

The Retail, Wholesale and Department Store Union, which represents workers at Macy’s and Bloomingdale’s, has many older members who have worked for a long time. These workers, says union president Stuart Appelbaum “are, of course, more likely to suffer severe effects from COVID.” So when stores began making plans to reopen to brick and mortar customers, the union “made it important to take into account older workers for whom it may not be safe to go back to work,” he says. 

The two department stores agreed to transition packages to make it easier for employees to retire early, Appelbaum said. In general, workers retiring at 55 and over with at least 15 years on the job—who tend to make more money than younger employees—can receive one week of pay for every year of service up to 26 weeks. Those under 65, and so too young for Medicare, will still have to find health insurance. Despite that, Appelbaum says many workers have opted for payments, although the union did not have specific numbers. 

Some New York City politicians and unions are eyeing a similar plan for some municipal employees, largely to save the city money. State Sen. Andrew Gounardes of Brooklyn proposed a bill that would temporarily allow many city workers aged 55 or older with 25 years of service to retire early without the usual reduction in benefits. 

Gounardes’ office projects the measure could save the city almost a billion dollars, and would also prevent layoffs of city employees.

 “Our public workers have been our heroes through this crisis and we need to do everything in our power to protect their jobs and save city revenue,” Gounardes said in a statement. 

Officials have estimated that about 7,500, or 10 percent, of eligible workers would take advantage of the incentives, with the average 60.8-year-old employee earning $91,000 a year. The measure specifically excludes police officers and firefighters, who can already retire earlier than non-uniformed city workers. There could be other exclusions as well, such as medical workers.

The bill is currently in committee and so unlikely to pass before the legislative session ends in December. Mayor Bill de Blasio has come out in support of the solution, along with “a robust stimulus package,” to address the city’s money problems. Leaders of major municipal unions, including DC 37 and the UFT, back it as well. 

“The purpose of this program is to provide an alternative to layoffs. Employee layoffs are detrimental to the city economy, the provision of services and the workers,” Harry Nespoli, chair of the Municipal Labor Committee, said in an October statement.

But Maria Doulis, vice president of the fiscal watchdog group Citizens Budget Commission, questions whether the incentives would produce real savings for the city. After studying such programs, CBC found that “they essentially provide a benefit to people who would have retired anyway,” she says, and increase pension costs, wiping out short-term savings. 

“This is a really deep financial crisis and it’s really important for city and state leaders to confront it” and look at workforce reductions, Doulis says. But she thinks incentives would be costlier than other ways to trim the workforce. The commission also does not think layoffs will be necessary—Doulis believes the city could realize significant savings through “an aggressive attrition policy” that entails not replacing many of the people who leave their jobs voluntarily. 

So far, without incentives, city workers seem to be retiring at the usual rate. The big exception are police officers: 1,189 retired between May 25 and Sept. 10, compared to 679 in the same period for 2019, according to Newsday.

Help for those who stay and those who go

Whether or not incentives make sense, experts say there is a lot the government could do to help older workers during the pandemic and beyond—though most are more likely to cost money than save it. These include increasing unemployment benefits, raising Social Security benefits along with a minimum benefit to keep people out of poverty, and letting people become eligible for Medicare at age 50. 

Other proposals would flip the retirement incentives idea, encouraging older people to stay in the workforce. Now, law requires many working people over 65 to use their employer-sponsored insurance policies to cover any medical expense, seeking reimbursement from Medicare only for what remains. Finkelstein argues that reversing this arrangement—making Medicare the primary insurance—would benefit companies as well as older workers by making people aged 65 and over more attractive to employers. “You’re making your most expensive employee to insure your cheapest to insure,” she says. “There’s a potential benefit to the Medicare system also because it puts healthy people who are Medicare eligible back into the Medicare system.”

González-Rivera says if people over 55 are to stay in the workplace, they need training to keep their existing jobs or land new ones. “Older adults need career navigation help to get back in the game,” he says. “There’s no guidance counselor for them.”

Keeping people in the workforce longer, Johnson says, allows people to save more and increase their Social Security benefits. There are also intangible benefits both for older people and the places they work, which may benefit from their experience. After all, Finkelstein notes, “Data show older workers are managing this time better from a mental health standpoint than younger workers.”

It would also mean fewer older workers being cast out of jobs during a time of extreme uncertainty. Winograd sees lots of reasons for staying put, at least for now. In today’s world, she says, “You can’t go anywhere, you can’t do anything. You’re unlikely to get another job and, if you do, it’s not going to be safe.”

City Limits’ Age Justice series explores the issues facing a graying New York. It is supported by the New York Foundation.