An increasing number of our friends and neighbors are thinking about retiring. Whenever the subject comes up in my house, my wife informs me that she needs at least one year’s notice before my retirement so that she can find a full-time job. Apparently, she thinks that social distancing is not just for pandemics.
Apparently, an elevated number of Americans have not only contemplated retirement recently, but have actually followed through. Estimates suggest that somewhere between one and a half million and two and a half million people have retired since COVID-19 took root in the second quarter of last year. That is substantially higher than the pace we were witnessing prior to the pandemic.
Prior to COVID-19, retirement had been occurring at increasingly advanced stages. Labor force participation for those over the age of 65 has been rising steadily for thirty years; more than one in five people in that group were still working or looking for work prior to the pandemic. Most jobs are no longer physically taxing, and accumulated experience is very valuable to service occupations. Those who continue working often do so for the mental stimulation and to remain connected to the community formed by colleagues.
So the sudden curtailment of so many careers comes as quite a surprise. The unexpected departure of that many people from the labor force could create problems for the economy: while job creation has been robust over the past several months, there remain a lot of job openings and a lot of businesses hindered for want of help. Labor shortages have placed upward pressure on wages, which could carry over into uncomfortable levels of inflation.
It is easy to imagine reasons why workers might think about calling it a career under present circumstances. To some, workplaces present health risks that they can’t get comfortable with; to others, hybrid work arrangements reduce the in-person interactions that they find valuable. Employees displaced by the pandemic might be facing dim prospects for re-employment, and decide that retirement is preferable to an extended and uncertain job search.
But many of the people who say that they have retired simply cannot afford to stop working. A study of the recent retirement boom by The New School illustrates that many recent retirees have very modest levels of education. The Federal Reserve’s most recent Survey of Consumer Finances (SCF) found that those without a college degree typically have very limited financial resources.
