What is the 'silver exodus', and why is it happening?

Have you heard of the “silver exodus”? When I figured out what it was, I was slightly offended.

If you’re over the age of 50 and not employed, you are part of this financial phenomenon. It has even been referred to as a “permacrisis in the workforce”.

The last time I had a perm I was 15 and wanted to look like Kylie, but this time the phrase wasn’t a pop at ageing hairstyles.

Permacrisis (a permanent crisis) is the 2022 Collins Dictionary word of the year. My silver-haired age group has now caused permanent damage to the workforce with their unexplained exits.

I’m trying to think of a better name for it, but the bottle-blonde-bolt hits a nerve too.

Jokes aside, the stats are coming out of the UK and my gut reaction is it’s no different in New Zealand. Anecdotally, more over-50s seem to have thrown in the towel at work.

This isn’t the same as the pandemic-led “Great Resignation” or the “Big Quit”. These workforce changes appear to be reversing after people used lockdown periods to rethink the type of jobs and flexibility they want.

Stubbornly, the 50-to-65-year-old age group have dug in and stomped off permanently. The British numbers show 27.6% of this demographic are economically inactive. They’re even accused of exaggerating inflation by driving up staff shortages.

The Office of National Statistics found a dominant trend of people simply giving up, alongside the usual health and stress reasons you’d expect to find. Examples included “wanted a lifestyle change”, “did not want to work anymore” and “to retire from paid work”.

Coming at this from a financial perspective, we’d conclude these workers are wealthy and have created enough retirement income to go early.

But the startling statistic is yet to come. It wasn’t a trend driven by high earners. It’s the low-middle earners leading the way.

Of course, the low-middle could be living with higher-earning spouses and making their decisions for all manner of reasons. They may have built wealth through other assets when younger.

Wealth and income don’t always correlate when you’re our age. Most of us recall borrowing to buy property when the price was less than double our annual household income. Interest rates were double-digit, but they eventually waned.

With older boomers dying off, maybe we are also seeing the inheritance money-bomb beginning to hit.

We can’t prove this over-50s behaviour is mirrored in the New Zealand population, as Stats NZ doesn’t show economic inactivity by age group. Forgive me if I’m wrong here, but a quick snorkel around their website didn’t uncover it.

We monitor mullet-inactivity (youth who are not in education, employment or training) and give everyone else a boring-bob known as the “underutilisation rate”. This runs at 9% and includes people who would like more hours, or who are seeking employment now or fairly soon. It should be reworked into a more truthful unemployment rate.

Enticing this highly productive age group back into the workforce is what’s being discussed in the UK.

One industry noticing a big uptick in over 50s is hospitality.

Caterer.com says “hospitality is seeing the most dramatic ever transformation to its workforce”, noting that employers had seen a surge in this demographic.

The financial fallout

Despite knowing the complexities of financial decision-making, the “silver exodus” trend still bothers me.

“Lifestyle” may have come under the pandemic microscope, but retirement planning is a telescope out to age 90. That’s 35 to 40 years if you’re a spritely 50-something.

Mortgages are gone, kids are going or gone. Savings can be vast. Most couples should be living off one salary and saving a salary at this stage of their lives.

Have you calculated the impact of financial inactivity? Let’s punch out some numbers to make us think.

If you can get a job paying $68,000 a year, it’s $52,000 after tax, or $1000 a week in savings.

Saving $1000 a week for 15 years with market returns of 7% (after fees and tax) will give a lump sum of $1.35 million. With an 8% return, this increases to $1.46m.

• Saving $1000 a week for 10 years gives $742,800.

• Saving $1000 a week for 5 years gives $309,100.

Given we’re sitting at market lows, working now and investing could be one of the most lucrative financial decisions of your life.

If you’re 50 to 65 years old, the opportunity cost of inactivity is high when viewed through this telescope.

Opinions are a personal view and general in nature. They are not a recommendation for any individual to buy or sell a financial product. Readers should always seek specific independent financial advice appropriate to their own circumstances. Janine Starks can be contacted at moneytips.nz@gmail.com.