Being out of work is one of life’s more traumatic experiences. What’s worse is when the weeks of unemployment stretch into months, especially for workers who are older. Extended unemployment for workers in their 50s and 60s can completely upend retirement plans and force people to make financial decisions they never thought they would have to make. 

Recently we came across this article on long-term unemployment from the Wall Street Journal.  In it, reporters Te-Ping Chen and Harriett Torrey reveal data which shows how the number of American workers facing extended unemployment now stands at its highest level in eight years (not including the COVID pandemic). What’s more sobering in a time when the unemployment rate seems low is that many of these chronically unemployed workers aren’t counted in the Labor Department figures. The reason: they’ve given up the job search. 

Because the fragility of employment in today’s shifting economy can affect future retirees so drastically, we’re bringing this article to you. Part of financial planning involves preparing for the unexpected. We hope this Wall Street Journal piece provides some helpful perspective. (Please note that a subscription may be required to access the article online.) 

Many Job-Seekers Find Themselves “Out in the Cold” 

Chen and Torrey begin their article with this challenging statistic: “The number of people unemployed for at least 27 weeks topped 1.8 million, the highest level since 2017, not counting the pandemic’s unemployment surge. The median length of unemployment in the U.S. has also ticked up, from a seasonally adjusted 9.5 weeks in July 2024 to 10.2 weeks last month.” 

It’s a difficult reality to grapple with. Let’s see how they unpack it.  

Business Uncertainty Means Companies Have Slowed Their Hiring 

According to Chen and Torrey, this fraught landscape of job-hunting “highlights a significant undercurrent in a labor market jolted by tariff uncertainty and cautious businesses.” 

Job growth has been sluggish for months, they point out. Companies aren’t hiring, despite unemployment sitting at a relative historic low of 4.2 percent.  

“The rate of people in jobs or actively looking for work has tumbled to the lowest level since 2022,” their article states. “Economists say lower participation in the labor force is helping to keep the unemployment rate low, but also masking an increasingly dismal climate for job seekers.” 

From Recent Grads to Mid-Career Workers, Outlook is Murky 

Unemployment is always a risk, but especially when it stretches on longer than expected. It stunts long-term earnings for workers and puts a dent in retirement savings.  

“A new generation of graduates are struggling to land jobs and find a foothold on the career ladder, in part because artificial intelligence is taking on more entry-level work. Midcareer workers can stall in current jobs rather than climbing and improving their earnings,” Chen and Torrey write.  

Daniel Zhao, chief economist at Glassdoor, adds, “You start to worry about whether those workers are going to be able to get back into the job market.” 

Long-Termers Represent a Growing Share of the Unemployed 

These statistics have been reflected in the recent jobs report from the Labor Department, which showed “softer than expected hiring” this summer, as well as “sharp revisions” that slashed job creation in the months prior.  

The report states that the more than 1.8 million people who have been job hunting for at least 27 weeks now represent a quarter of total unemployed people. “A year ago those long-term job seekers were closer to one in five unemployed people. Job openings and hires both ticked down slightly in June, although another recent report showed that layoffs remained at a low level,” Chen and Torrey explain.  

The numbers of these “discouraged workers”—people who have stopped looking for a job—have changed very little from last year, according to the Labor Department report. Simultaneously the pool of people who are in the labor force has dropped. Chen and Torrey note that some economists say this reflects the Trump administration’s immigration crackdown.  

For Older Workers, Prolonged Joblessness is Discouraging 

The upshot of all of this is that some older unemployed Americans are left wondering if they will ever find another job.  

“I’m considering myself semiretired at this point,” says John Comber, 61, a software quality engineer in Sandpoint, Idaho. John hoped to work for another ten years and figured he could easily pick up more work when his most recent contract ended in 2023. But the reality is sobering: he estimates he has applied for 500 jobs and received zero hits.  

Economists say that the available jobs might represent a “step down” from what workers expect. “Though wage growth for people switching jobs typically eclipses growth for those who stay—reflecting that job hoppers often can negotiate a pay bump—that premium has evaporated this year, according to data from the Federal Reserve Bank of Atlanta,” Chen and Torrey write.  

They conclude their article with a spotlight on Jim Plunkett, a 54-year-old Yonkers, New York resident, who lost his fashion-industry job doing production sourcing. He says he’s drained about $25,000 in savings and took out $20,000 in cash advances to pay his bills during his longer-than-expected job search. Recently, he took a job installing digital media on brochure racks for half of his previous income.  

“Is it the greatest time in my life to be starting over?” says Plunkett. “No, but you gotta do what you gotta do sometimes.”  

Rajiv Nagaich – Your Retirement Planning Coach and Guide 

The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. Retirement: Dream or Disaster joins Rajiv’s ground-breaking DVD series and workbook, Master Your Future, as a powerful planning tool in your retirement toolbox. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.  

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read. 

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more. 

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.  

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important message. And remember, Age On, everyone! 

(originally reported at www.wsj.com)