Working Americans are struggling right now because of COVID-19. Many have lost their jobs completely, while others have seen their income take a drastic hit. But while you might think retirees are less likely to be impacted by the crisis since they're not relying on a paycheck from work to stay afloat, a new survey by Personal Capital reveals that that's far from the truth.

In fact, about 37% of retirees say they've experienced a financial hardship due to COVID-19. And as a result, about 25% say they're likely to come out of retirement and return to the workforce. This holds true in spite of the fact that almost 64% of retirees have intentionally been spending less during the ongoing crisis. Talk about a potentially harsh change of plans.

Older man with serious expression resting hand on chin


Why are retirees hurting so badly?

Many seniors depend heavily on their retirement accounts to pay the bills in the absence of a paycheck from work. Given that Social Security is only designed to replace about 40% of the typical worker's pre-retirement paycheck, and most seniors need roughly twice that much money to live comfortably, that makes sense.

But portfolio values have suffered a major hit due to the pandemic. The average 401(k) plan balance dropped 19% between the end of the 2019 and 2020's first quarter, reported Fidelity in April, while the average IRA balance saw a 14% decline. As such, many seniors may be hesitant to touch their retirement accounts for fear of actually locking in those losses -- particularly those who are invested heavily in stocks.

Now retirees are generally advised to shift toward safer investments, like bonds, to avoid serious losses like the ones seniors may be looking at today. But even among seniors who are reasonably loaded up on bonds in their IRAs or 401(k)s, the shock of seeing a large chunk of their wealth disappear on paper (or on screen) may be jarring enough to drive them back into the workforce -- whether they want that or not.

That said, some retirees have no intention of answering to a boss again, despite their inclination to join the workforce after leaving it. Of those who plan to go back to work, 51% intend to work for themselves, and that may prove to be a very reasonable compromise. But those who wish to go this route should map out a business plan before diving in. And those who expect to need access to capital to get their ventures off the ground may be in for an unpleasant surprise, as small business borrowing gets trickier when there's major economic turmoil at play.

Of course, some retirees may find that securing work is easier said than done right now. Health concerns and limited opportunities may keep some people who want to rejoin the workforce out of it against their will. Either way, it's clear that seniors are bearing the brunt of the COVID-19 crisis in their own way, and are having to make seriously hard choices because of it.