Rethinking Retirement During a Pandemic

Earlier this year, I wrote a column called How (Not) to Retire During a Pandemic. As it turns out, retirement claims are indeed down this year. Does that surprise you? Or does it make you say, “I could have told you that”?

Here’s how the number of claims received at the Office of Personnel Management in 2020 compare to last year: 

• January had 3,870 more claims than January 2019: 17,134 vs. 13,264 (The higher 2020 number reflects delays caused by the furlough that ran from Dec. 22, 2018 to Jan. 25, 2019 for employees who retired at the end of the 2018 leave year.)
• February had 1,519 fewer claims than February 2019: 9,273 vs. 10,792 (The 2019 figures also reflect fallout from the furlough.)
• March had 3,482 fewer claims than March 2019: 6,566 vs. 10,048
• April had 253 fewer claims than April 2019: 6,740 vs. 6,993
• May had 1,229 fewer claims than May 2019: 6,648 vs. 7,877
• June had 1,646 fewer claims than June 2019: 6,555 vs. 8,201
• July had 1,181 fewer claims than July 2019: 6,819 vs. 8,000
• August had 2,103 fewer claims than August 2019: 6,775 vs. 8,878

Why are fewer people retiring in 2020? Here are some possible reasons:

• It’s been difficult to plan a vacation in 2020. This could result in many employees being able to save more annual leave, resulting in a larger lump sum payment at retirement. There may be a surge in end-of-leave-year retirements in 2020 as a result of this additional leave accrual for those who were already planning to retire in 2020. 
• March 2020 saw one of the most dramatic stock market drops in history after a 10-year bull market. That may have shocked some employees who had been mainly C Fund investors in the Thrift Savings Plan. Although the C Fund is up almost 22% for the last 12 months, market volatility throughout the year may have caused TSP participants to shift to investments with more stable (but typically lower) returns. That in turn could cause them to delay retiring.
• There have been rumors of buyouts in some agencies (the Federal Deposit Insurance Corporation offered them earlier this year) and some employees who were planning to retire are now taking a wait-and-see approach.
• Although the majority of federal workers have continued to work throughout the pandemic, there have been fears of furloughs. And some federal workers have spouses and children who have lost their jobs due to the ongoing health crisis. As of the end of July, the TSP had seen more than 13,700 withdrawals under provisions in the CARES Act involving people who have been affected by the coronavirus pandemic. The average withdrawal was $26,900. For those still in federal service, the usual requirements that you be at least 59½ years old or certify that you meet financial hardship criteria are waived.

Finally, maybe some people have just gotten comfortable working from home and aren’t in as much of a hurry to move on as they were at the beginning of the year. Take it from someone who has worked from home for the past 32 years, it’s not bad, and the commute can’t be beat.