The economy may be emerging from the Great Recession, but many retirement planners may find 2014 to be one of their most challenging years.

The reasons have to do with two workforce trends affecting the Baby Boomer generation: the growing number of older workers that are pushing off retirement and the still large number of Boomers that remain unemployed as a result of the recession.

The impacts are that more Boomers are ill-prepared to face retirement than members of the previous generation, while many expect to work part time for years into what they had assumed would be their break from the workforce.

Those are among the findings of recent research by the American Association of Retired Persons (AARP) Public Policy Institute.

The Institute has been keeping a close eye on the factors impacting the Boomer workforce that it explored in its October 2010 report, “Boomers and the Great Recession: Struggling to Recover.” A year later the Institute published a follow-up study of workers participating in the first study. This year the organization has been keeping an especially close watch on unemployment trends among those Boomers.

“Unfortunately, things are pretty much status quo according to the additional research that has been done,” said Sara Rix, a lead researcher with the Institute, and one of the authors of the 2010 and 2011 studies. “The big issue is the long-term unemployment rate among Boomers. It has absolutely skyrocketed.”

While overall unemployment numbers remain high among the general workforce, they are especially troubling at the oldest segments of the population, Rix notes. Despite their skills and experiences, older workers historically have a harder time finding suitable employment. The recession caused many to be out of work for two, three, even four years or more.  

 “Americans of all ages suffered during the recession. Older Americans, however, have relatively little time to recover from job loss, stock market losses, declining housing values, or having tapped into and possibly having exhausted their savings. Their ability to retire as planned and with the resources they had been counting on may have been jeopardized. How they coped, or tried to cope, has implications not only for those directly affected but for public policy as well,” according to the Institute’s 2011 updated report.

For its first survey, the Institute conducted interviews with 5,027 current or recent workers and job seekers aged 50 and over. Subsequently, “to obtain insights into how older Americans’ financial situation and perceptions about current and future well-being may have changed in the months since initial contact (when for a few months, at least, the economy seemed on the road to recovery) a brief online follow-up survey of a random sample of 1,304 of the original respondents was conducted in August 2011,” the report states.

According to the research, a sizable percentage of Boomers experienced some unemployment.  When first surveyed:

  • 17 percent of Boomers were jobless and looking for work.
  • Another 13 percent (referred to as reemployed) had jobs but had experienced involuntary unemployment at some point during the previous three years.
  • Another 10 percent had left the workforce within the previous three years and were not looking for work.

“Boomers have had a rough ride over the past several years,” the Institute’s research confirms. “The recession and its aftermath have left many without jobs, having exhausted their savings, and with homes they can neither afford nor sell. The surveys indicate that Boomers are uncertain and probably frightened about what the future holds for them as they edge toward retirement.”

Put simply, “if they don’t get into the workforce quickly, they may not recover,” Rix explains.

All of this is not good news for retirement planners, who are faced with a large pool of Boomer retirees that have burned through their savings and dipped into other assets they had planned to save for their golden years. It may seem especially challenging to convince clients to hold off on collecting Social Security.

But that is probably the best advice that these Boomers can receive, Rix said, adding that recent recession and the growing unemployment numbers among soon-to-be retirees will serve as a wake-up call for younger generations of workers.

“The ability to retire in dignity was one of the great success stories of the 20th Century. The Boomers did everything they were supposed to do, but they had the rug pulled out from under them,” Rix said.

In the meantime, many working Boomers have made the decision that they simply can’t retire at age 60, 62, 65, or even 67. They must remain active in the workforce for a number of years to come, whether full time or part time.

“It’s really hard for Boomers now to make up for their losses,” Rix said. “They don’t have much choice but to work longer and accept a lower standard of living.”

That is a pretty bitter pill to swallow. And it should give notice to younger workers that they need to think about retirement at an early age, not wait until it is just around the corner.

“It’s really hard for people at a younger age to think about retirement,” Rix said. “But the younger workers need to understand that a lifetime of contributions is going to be critical. That is the most pressing challenge.”