Roughly two-in-five workers at or over the age of 50 who had recently retired, left a job or considered leaving a job would not have done so prior to the onset of the COVID-19 coronavirus pandemic, and one-in-five retired early because of the pandemic. Meanwhile, the loss of engagement with the labor market appears to have been driven by seniors aged 65 and older, according to research from AARP.
“[A]nalysis of government data from the Federal Reserve Bank of St. Louis’ Institute for Economic Equity (IEE) finds that the increase in retirements during the COVID-19 pandemic has been driven primarily by those age 65 and older, with a particularly steep rise in retirements among those ages 65 to 74,” AARP describes. “The data indicate that as of October 2021, there were 3.3 million more retirees than in January 2020, a 7 percent increase. These findings add more detail to our understanding of labor market trends during the pandemic and may help economists predict the likelihood of retired workers returning to the labor force in the months ahead.”
A retirement “wave” among members of the baby boomer generation had already been predicted in the past, but the pandemic appears to have accelerated the trend beyond such predictions, AARP notes.
“Last month, an analysis of government data by the Federal Reserve Bank of St. Louis estimated that as of August 2021, there were slightly more than 2.4 million ‘excess’ retirements due to the pandemic than would have otherwise occurred,” writes Jennifer Schramm, a senior strategic policy advisor at the AARP Public Policy Institute. “These retirements account for more than half of the 4.2 million people who left the labor force from the beginning of the pandemic to the second quarter of 2021. These findings suggest that a large share of the workforce that left the labor market during the pandemic came from workers retiring.”
Determining the shared characteristics of the cohort of retirees that have followed this trend could be critical in forecasting any further disruptions to the labor market in the near future, she says.
“For example, with the IEE research showing that during the pandemic most retirements were among workers ages 65 and older while retirements mainly remained flat among those ages 55 to 64, the resulting older age profile of pandemic retirees makes it somewhat less likely that many will be heading back into the workforce,” she says.
Older workers with higher levels of education also appear to have remained working for longer, she says, as well as workers with generally higher levels of income.
“Such workers are more likely to work in occupations with good working conditions, including access to remote work and a safer work environment,” Schramm writes. “However, this segment of the older worker population is also the least vulnerable; they are more likely to have retirement savings and, once retired, may have less financial need to return to paid work.”
Read the column at AARP.