Post-pandemic, Chicagoans prep for delayed retirements

 Ruben Mendoza’s retirement plans went out the window when the pandemic shut down Hyatt Centric’s banquet hall on the Magnificent Mile over a year ago. Even as restrictions lift across Chicago, Mendoza will still be out of work for most of the year, he said.

 “I was thinking about being able to retire at 63,” Mendoza, 43, said. “But now it’s looking like I may have to be working full time or at least part time because I probably won’t have enough.”

 Chicagoans like Mendoza are changing their retirement plans because of the pandemic. The U.S. gained 559,000 jobs in May, dropping the unemployment rate for May to 5.8%, less than a percentage point lower than it was in April, according to the latest unemployment report. However, that’s significantly lower than the pandemic high of 14.7% unemployment in April 2020, according to Bureau of Labor Statistics.

 Despite the unemployment decrease, many workers, including Mendoza, are still unemployed. As a banquet captain, Mendoza oversaw floor staff and made sure events went off without a hitch, he said. However, even as conventions, parties and ceremonies start ramping up for this summer, Hyatt Centric lost most of its clients to cities that loosened restrictions months earlier than Chicago did, he said.

 For Mendoza, that’s meant delaying his retirement and losing about half of his retirement savings, he said. Even when his work is steady again, he’ll have to forego vacations and cut his budget depending on how long he’s ultimately out of work, he said.

 Richard Little, founder of Chicago-based Serenity Wealth Management, discovered that many Chicagoans are planning to retire later because of the pandemic. Several of his clients who were or still are out of work because of the pandemic had to tap into their retirement savings to make ends meet or put retirement contributions on hold, said Little, who has been a wealth manager for 12 years.

 “The folks who it affected more were already the ones saving less, so they were already behind on retirement savings,” Little said. “They were already in situations where they were spending more than they were saving, and then this just kind of hammered that more.”

 However, clients in a better financial situation before the pandemic won’t likely see long-term effects on their retirement savings, Little said. The pandemic also won’t likely change how they save for retirement, he said. Little still recommends that his clients diversify their retirement savings, such as investing in equities, he said.

 No matter their pre-pandemic financial situations, many of Little’s under-40 clients are deciding to save less for retirement so they can spend more now, he said. These clients have modified their retirement plans at least in the short term so they can enjoy some of the things they’ve missed during the pandemic, he said.

 “The pandemic has caused people to value their freedom a little bit more now,” Little said.  “So, the conversations I’ve had more than anything else that may affect retirement later on is that more clients want to do travel now versus later, for example.” 

 Sara Zhang, a business analyst at Indiana University who works remotely, is one example of a Chicagoan deciding to save less for retirement because of the pandemic.

 The university contributes 10% to her retirement plan no matter if she matches the contribution or not, said Zhang, 28. Before the pandemic, she was matching that contribution, she said. Now, she’s not contributing any extra to her retirement for the foreseeable future, she said.

 “Working remotely made a difference,” Zhang said. “I will always be remote after this, and I can live anywhere. It opens up the idea of a different kind of retirement, and you don’t have to be tied for a city. So, I’d rather have more spending money now. Why save excessively?”

 Zhang plans on spending more on travel, visiting friends and family, as well as eating out more with the extra money, she said. To make that happen, she’s open to the possibility of retiring much later than her original goal of her mid-60s, she said.

 “I could see myself working until I just die, to be honest,” Zhang said. “Actually, one of my managers is 63. I wouldn’t mind still being here at that age, either.”   

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This story was originally written for a Medill business course.