According to Will Burkitt, retirement innovation leader and partner at Mercer, the overwhelming sentiment around COVID-19 continues to be “uncertainty” – which is creating “very real issues” for many Australians throughout a number of stages of retirement.

He flagged four main groups who are set to suffer through the economic downturn associated with the health crisis:

Delayed retirement

“Many Australians approaching retirement are now facing the real prospect of having to delay their retirement date and work for longer,” Mr Burkitt said.

He explained that this is on the basis that the size of their savings has significantly been depleted from the fall in capital markets and the prospect of housing valuations falling as well.

Predicting that it is likely going to take a couple of years for capital markets to rebound to the level they were at prior to the COVID-19 pandemic, the retirement expert commented that many pre-retirees “are also having to dip into their retirement savings to get by in the short term”, including through utilisation of the government’s early access to superannuation scheme.

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Forced unplanned retirement

Another “sad outcome” flagged by Mr Burkitt is “the reality of many businesses and organisations needing to cut their costs or businesses ceasing to being financially viable”.

This will impact with higher unemployment rates across the country in medium to longer term, the retirement expert conceded, highlighting how there will be a cohort of Australians in their 50s and 60s who will lose their job in the workforce and also not be able to find replacement work as they may hope.

It’s not a new phenomenon: “A trait in workforces across Australia, pre-existing COVID-19, is the prevalence of discrimination against experienced works, being those aged 50 years or more.”

“Among long-term unemployed Australians, the average number of weeks a mature aged person is long-term unemployed is approximately 75 weeks, while it is 48 weeks for all age groups,” Mr Burkitt said.

In addition, while roughly 37 per cent of unemployed mature aged people are long-term unemployed, only 24 per cent of unemployed all age groups people are.

“It is a distinct possibility that this discrimination in workforce decision-making will widen even further post COVID-19,” he added.

Early-stage retirees

Mr Burkitt also highlighted the position a number of early-stage retirees are suddenly finding themselves in.

“Spare a thought for retirees who have only recently retired, say in the past few years, who now face into the remainder of their retirement with a smaller pool of wealth and hence will need to either source new additional income or manage within a lower living standard to curb expenses,” he said.

According to the partner, the impact from “sequencing risk”, the risk of a significant decline in wealth valuations at a crucial time in a person’s life, coming true for early retirees is “significant”.

With most retirees not holding any annuity product to provide them with a guaranteed income stream, Mr Burkitt said “they are impacted with a decline in their allocated pension pool and other COVID-19 impacts such as significantly reduced dividends being paid by listed companies”.

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In the meantime, the retirement leader has conceded that another impact of COVID-19 -elated spending will be the government’s reduced ability to fund social security for the aged pension, aged care and healthcare over the medium to longer term.

“This is due to the need for the government to manage down a significantly larger pool of debt as a result of the COVID-19-related stimulus.”

Early to later-stage retirees

Last but not least: “There are many early retirees facing broken dreams from the cruel nature of the COVID-19 pandemic and its spread through physical contact,” Mr Burkitt raised.

The tragedies that have unfolded aboard cruise ships is a tragedy for all retirees, he said, with cruising having become the preferred approach for enjoying travel in retirement.

“Retirees will now be questioning whether it is in their best interests into the future,” he said.

Not only this, the current pandemic would see many retirees having “their sense of invincibility shattered”.

According to Mr Burkitt, “COVID-19 has been a rude awakening for people in their 60s and 70s: Just because they are healthy and able to enjoy retirement as they dream [it], they are in fact vulnerable to health shocks.”

This will shape a change in lifestyle decisions into the future, he offered.