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COVID-19 forced many into retirement earlier

Yahoo Finance's Stephanie Asymkos breaks down the latest data on COVID-19 and retirement.

Video Transcript

- Put this into perspective-- how many people have been affected by the COVID-19 pandemic and, as a result, are retiring early?

STEPHANIE ASYMKOS: Sure. So there's a new report from the Federal Reserve that came out that 29% of adults who retired in the past year cited that factors related to COVID-19 were the reason that they retired. And this new report really accelerates retirement for baby boomers because either work wasn't available or they've had to stop working to care for family members. And only a small fraction of that responded that they retired because they had just simply reached that typical retirement age.

And the quarantine also served as a real-life experiment and simulation of retirement for some. So baby boomers who found themselves in this position were forced to live on tighter resources, as is common among retirees. And with all of their newly acquired free time, which we all had, this group was able to really focus on spending time with their families and leaning into hobbies, which is also associated with those golden years.

- Stephanie, when somebody retires, their career income stream ends-- they might have other income streams from investments. But what if they're caught off guard a little bit? What can somebody do who finds himself in an unexpected situation facing retirement?

STEPHANIE ASYMKOS: Right. So I connected with several financial planners who shared anecdotes about their clients. And what I found is that there's a lot of nuance. I heard of one instance of a 60-something FedEx courier who professionally bowed out and retired last November, right before the holiday rush. And the reason being is that, we all know the volume of shipped goods rose so dramatically last year that this person couldn't keep up with the increased physical demands and pressure. And the sacrifice just wasn't worth it to him. So that ultimately led to his early retirement a few years ahead of schedule.

I heard about another woman in her 60s whose job at a doctor's office was eliminated at the start of the pandemic. And her financial advisor shared with me that she was always a little apprehensive about retirement for financial reasons. But it turns out that the downtime allowed her to gradually transition. She kept her expenses low and made lifestyle and financial report re-prioritizations so she doesn't have to look for a new job now.

So either people tapped out for personal reasons or circumstances that were beyond their control. And then, in this example, these people used financial advisors to really give them that broad scope of where they were sitting financially and if this was even possible for them.