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Retirement for Millions Impacted by Opioids

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businessman-hurdleMillions are dealing with the personal consequences of opioid use. As individuals plan their futures after addiction, it can be helpful to recognize the financial consequences they face as well. With careful planning and commitment over the long term, serious financial challenges can sometimes be addressed, avoided and overcome.

It's hard to discuss the tragic consequences of opioid addiction. It has cost millions of Americans their lives, their health, their relationships and their careers. However, a recent report now underscores the extent to which opioid addiction is also likely to turn into a long-term financial problem as well.

A working paper for the Federal Reserve Board of Cleveland, "Opioids and the Labor Market," demonstrates a direct link between a decline in labor-market participation and areas with high rates of prescriptions to opioids. Thinking of how opioids cause people to drop out of the job market - even if only temporarily - suggests several long-term financial impacts that could ultimately affect their ability to reach retirement.

Opioids - the career killer

The civilian-labor-participation rate has been declining steadily since the turn of the century, from 67.1 percent in December of 1999 to 62.8 percent as of April 2019. This 4.3 percent drop in the labor-participation rate may not sound particularly significant until you project it over a labor force of 162 million people. Seen in that context, it represents a reduction in the labor force by about 7 million people. That's 7 million fewer people without the income and benefits associated with having a job.

Labor participation is the percentage of the adult population that is either employed or actively seeking employment. Changes in the labor-participation rate can occur for a variety of reasons such as economic cycles and demographic changes. However, in the study "Opioids and the Labor Market," the researchers correlated levels of opioid use in specific counties with labor-participation rates in those counties over a period of years, and then compared labor-participation rates in those counties with what was going on in the United States in general over that time. The goal was to isolate the relationship between heavy opioid use and labor participation.

The research concluded that roughly 44 percent of the decline in labor-force participation from 2001 to 2015 could be linked to high opioid-usage rates. This means that opioid usage has affected millions of careers - in effect, it has become a career killer, causing people who would otherwise be working to drop out of the job market instead. It's clear that the healthcare crisis we watched explode over the last decade is also taking its toll on the finances of its many victims.

5 long-term financial impacts of opioid use

The report certainly paints a difficult picture. Looking at the financial impact of opioid use in broad terms, one can see how the basic challenges come to be.Even supposing that habitual opioid users only drop out of the job market temporarily, here are five ways this could negatively affect their finances:

  1. Time spent on public assistance vs. earning a wage erases years of retirement savings

    While some form of assistance - welfare, disability, social security benefits, etc. - provides enough money to get by on without working, it won't provide enough income to save for retirement. Saving for retirement is a big job, and losing even a few years of saving for retirement could profoundly affect retirement finances.

  2. Falling behind on the advancement ladder can cripple wages throughout a career

    When advancement opportunities and corresponding wage increases are factored in, it's clear that being out of the work force for even five years can amount to more than five years' worth of income lost. The result can permanently suppress wage growth for some.

  3. Gaps in employment can make re-entering the job market tough

    Even after opioid addiction has been dealt with and relegated to the past, it can still be difficult to explain an extended gap in one's work history. Finding gainful employment again may not be a given even with a long history of experience in a particular field. For some, this could necessitate a career change and further impact their earning power.

  4. Pre-employment drug-testing may limit employment options

    Re-entry into the job market is critical for recovering addicts, but pre-employment drug-testing may be a barrier for anyone that is still struggling to make the transition away from opioid use. This may limit their employment opportunities and further delay their re-entry into the job market, stunting their ability to recover financially.

  5. Losing healthcare benefits can make recovery and retirement even more expensive

    Another problem with dropping out of the job market is losing healthcare benefits. Without those benefits, people may elect to ignore signs of declining health and put off doctor visits. Unfortunately, when healthcare issues are not addressed, they tend to cascade and become larger - and more expensive - issues to handle, all of which sets back recovery and the hope of an enjoyable retirement in one's later years.

Moving toward a better future

In this respect, finances operate the same way for everyone: Financial setbacks can be experienced at any time, for any number of reasons, and can happen to anyone. Though the opioid crisis has been devastating for so many, it is important for those who are recovering to recognize that difficult financial circumstances can be reversed. There are many examples of people who have reached new heights after facing significant headwinds.

Hope for the future starts by realizing that the financial impact of opioid addiction does not have to be an endpoint and that creating a better future is something we can all work toward.

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