Millions of Americans retired sooner than they anticipated because of Covid-19
The pandemic pushed millions of older Americans out of the labor force. They retired sooner than they anticipated because of COVD-19. But according to economists, the Great Retirement of Baby Boomers should have spawned a surge in Social Security benefits applications — but applications for Social Security benefits are roughly flat. Perhaps because they aren’t retired.
The disconnect has economists wondering how many of these baby boomers might come back to the workforce — a key question when job openings have remained near record levels for months now.
The retired share of the population is now substantially higher than before COVD-19, according to a Federal Reserve analysis. About 2.6 million older workers retired above ordinary trends since the start of the pandemic two years ago, based on estimates by Miguel Faria e Castro, an economist at the Federal Reserve Bank of St. Louis.
Americans retired early for many reasons, including because they lost their jobs, feared for their health or had to care for family members. Another factor was the boom in the value of financial assets such as investments and real estate, which gave some Americans an opportunity to stop working earlier than they anticipated.
Average net worth jumped 12% and 14.8% among families with a head of household aged 55 to 69, and 70 and older, respectively, Fed researchers found.
Under the U.S.’s federal retirement program, eligible workers receive a percentage of their pre-retirement income in monthly payments from the government. Workers can start receiving Social Security payments at age 62, with full benefits coming at age 66 or 67 depending on their date of birth.
Despite the surge in baby boomers saying in surveys they retired, applications for Social Security benefits have been fairly flat, based on calculations by the Boston College Center for Retirement Research.
The surge was led by older White women without a college education, according to research by the St. Louis Federal Reserve. And, the Great Retirement — whether forced or by choice — was driven by baby boomers aged 65 and older, the regional Fed bank wrote in a blog post.
References:
- https://www.wealthmanagement.com/retirement-planning/great-retirement-disconnect-puzzles-us-economists
- https://www.aljazeera.com/economy/2022/1/11/great-retirement-in-us-is-led-by-older-female-baby-boomers