An executive summary of a WSJ article
The Wall Street Journal article, “Here’s What a Late-Career Layoff Looks Like in America, in 5 Charts” highlights the significant challenges faced by older workers (ages 50-65) in the event of a layoff.
Here are the key takeaways from the article:
- Increased Vulnerability and Financial Strain: Older workers are more vulnerable to job loss, and when laid off, face significant financial hardship, including potential income drops and the need to tap into retirement savings prematurely. Many have major financial obligations like mortgages and college bills. The typical older household’s income drops by 42% after one member leaves a job prematurely.
- Longer Job Search and Reduced Pay: Older workers often face longer periods of unemployment compared to younger counterparts. It takes nearly 26 weeks for those ages 55-64 to find a new job, compared to 19 weeks for individuals aged 25-34. When re-employed, older workers frequently experience significant pay cuts, averaging around 11%. Those who frequently work without benefits in their 50s and 60s end up with about 25% less retirement income than workers with benefits.
- Impact on Retirement Security: Layoffs can severely undermine retirement security as older workers may lose benefits, miss out on 401(k) or IRA contributions (including catch-up contributions for those 50 and older), and may be forced into earlier retirement than planned.
- Ageism and limited options: Ageism can be a barrier to re-employment for older workers. They are less likely to transition into new fields after a layoff, tending to remain in the same industries where they worked before losing their jobs.
- Need for Proactive Planning: The article underscores the importance of proactive retirement planning and building a strong financial cushion to mitigate the impact of potential late-career job loss. It emphasizes that the decision of when to retire may not always be a choice, according to Copeland of the Employee Benefit Research Institute.
The article emphasizes the need for individuals to prepare for these challenges and for employers to address ageism and support older workers through these transitions.
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