Pandemic fatigue leading more company leaders to choose early retirement

Succession planning may bring to mind aging small business owners eying retirement, but think again. Professionals of all types are asking financial advisers at Domani Wealth if they can retire early this year.

From physicians to C-suite level executives, professionals nearing retirement want to know if they can leave the workforce early and save themselves from the stress of the COVID-19 workforce, said Angie Stephenson, senior wealth adviser and COO of the East Lampeter Township, Lancaster County-based wealth management firm.

Stephenson’s clients are realizing their careers have been forever changed by the pandemic and would rather get out of the workforce, even if it means having less money into retirement. This is bad news for businesses that will need to quickly find a replacement and teach those new hires the nuances of the position, she said.

Employees who made it through the pandemic and learned its lessons are more important than ever. Under these conditions, Stephenson said, businesses should have a succession plan not only for their CEO’s and CFO’s, but their managers, too.

“This is about the leaders. It doesn’t have to be the C-suite,” she said. “It can be your factory manager. Imagine that you have a good manager who understands everything that needs to happen with COVID. They understand all of the HR issues of how to schedule and he is 60 and says he is going to retire.”

Management positions are more important now than they once were, Stephenson said. One of Stephenson’s clients, the CFO for a logistics company, announced in July that their plans to retire because of the pandemic, but was swiftly asked by the company to continue working virtually until they could afford to train a replacement.

“I have had leaders in companies come in and say ‘I am going to retire,’ and now, all of a sudden, you are seeing these businesses scramble,” Stephenson said. “If someone in a key position says that they want to retire by the end of year, to find a good replacement, get them in place and understand all the nuances, it stands to really harm the business.”

Other clients are looking to get out of the ownership of their companies and sell their portion of the organization to stay on as employees.

This year’s crisis has been a difficult one to consult for compared to the financial crisis of 2008 where there was a finite set of issues, according to Stephenson. In 2008, businesses could see that the country was progressing out of the recession thanks to federal bailouts for financial institutions. The pandemic has no such silver lining.

“What do you tell a client during COVID?” she asked. “We are fortunate that we have a vaccination but who will get it? How costly is it to administer and who will take it?”

Domani Wealth is reforecasting personal financial plans not just for businesses but for everyone, according to Stephenson. People are traveling and spending less, she said, and may be happy to retire early and forego the expenses they would have planned to incur. Business owners looking to sell may also sell at a lower price knowing that they won’t be taking that year-long vacation across Europe.

“People are thinking more simplistically,” she said. “When you readjust their plans and show them what they could live on, most of them look at what they spent this year and go, yeah that’s not so bad.”