It’s no secret that inflation is higher than it has been for a long time. Job security and inflation go hand-in-hand. If you’re working towards retirement, you might wonder if inflation will impact your job security.
While job security is likely still important to you, it may not be as important when you start to approach retirement. Economic stability is often the bigger issue, the closer you get to retiring from your job. This is why many seniors retired early during COVID-19 instead of returning to work.
How Job Security and Inflation are Related
If you’re still working, you might wonder how job security and inflation are related. When the unemployment rate is high, there are not enough jobs available for the workers. The labor supply exceeds its demand when the unemployment rate is high.
In this situation, wage inflation tends to remain low, too. Employers don’t need to offer higher compensation to get people to work. Instead, employers have their choice of many different candidates.
The opposite is the case when the unemployment rate is low. In this scenario, there are more jobs than people to fill the jobs, and employers become a bit more desperate. When companies need workers, they might offer higher wages and other incentives to get the workers they need.
Inflation throws a bit of a wrench into this common supply and demand equation, however. When workers have to pay more for food, gas, and other everyday items, it can turn this entire equation upside down and sideways.
Higher prices cause both the employee and the employer issues. There might be plenty of jobs available, but employers still have to be selective as the wages they pay are one of the largest expenses. On the other hand, employees might not be willing to accept lower wages because they won’t be able to afford the things they need without a higher wage.
This creates a circular issue as higher wages lead to companies charging higher prices, and it just goes around and around. Inflation, especially at high rates, throws the common supply and demand model off and can have a direct impact on job security.
How Inflation Impacts Senior Citizens
As a senior citizen, you might be wondering how inflation will impact you directly. Inflation impacts everybody because we all have to buy food, pay utility bills, put gas in our vehicles, and pay for other things. However, job security and inflation will be different for seniors compared to others in the workforce.
Job Security for Working Seniors
If you’re still working, you might be worried about your job security due to inflation. Depending on how close you are to retirement, your level of worry might be high or not so high. Inflation could cause you to put off retirement longer if you don’t have the necessary economic stability to stop working.
As a working senior, you may need your job to afford all of your bills. Maybe you still have a mortgage payment, car payment, and other bills you cannot afford without working. If this is the case, job security and inflation might be a real worry right now.
Many companies have started laying off employees, and others are considering layoffs due to inflation. It’s hard for employers to afford the wages they need to pay while also raising prices and losing profits. This can have a direct impact on your job security, depending on where you work.
The Impact of Inflation on Fixed-Income Seniors
After retirement, many senior citizens live on a fixed income. This may include a pension, a 401(k), social security, or other benefit payments that don’t change much yearly. Inflation can become a bigger issue when you live on a fixed income.
Many seniors are already facing issues due to inflation cutting into their income. They might have cut back on some of the things they purchase and changed the way they spend the money they get. Some have even returned to work to supplement their income.
With many seniors living solely on Social Security income, inflation can become a huge issue. Even though these payments have a cost-of-living adjustment built in, it usually takes three to 12 months for this adjustment to be reflected in the checks received by seniors.
Job Security vs. Economic Stability
Job security becomes less of a worry for those approaching retirement, while economic stability enters the picture. You want to make sure you can afford the lifestyle you prefer once you actually retire. Of course, keeping your job until it’s time to retire can help.
Job security becomes less important if you’re already working towards economic stability through savings and investments. Many of the senior citizens that retired early due to COVID-19 had the ability to make this decision due to economic security. They were able to decide to leave the workforce sooner than planned because of the smart decisions they had made with their money.
One of the best ways to become more stable economically is to pay off debt. For example, many seniors feel great relief when paying off their mortgage. Paying off other debts can also be helpful, but this is often the largest monthly payment in the budget.
The Impact of Inflation on Job Security
For many Americans, inflation will have a direct impact on job security. Even though the labor market has been hot, as inflation keeps going up, many companies will look to layoffs or even close locations to stay afloat. This could lead to fewer jobs and more people without the job security they once thought they had.
It’s best to strike a good balance between job security and economic security during inflationary times. When inflation is high, things become a bit harder to predict. Many outside factors often influence the laws of supply and demand.
If you have the necessary savings or other income sources, job security won’t be as important. However, if you depend on your job income to pay your monthly bills, inflation could be causing you to make some very difficult decisions.
