MNI: SF Fed Finds Covid Led 2M Americans Into Early Retirement

Two million older Americans have opted for early retirement since Covid, a trend that appears to be accelerating even as the job market bounced back and meaning employers are turning to younger workers to fill the gap, San Francisco Fed economists said in a paper Monday.

Most of the decline comes from those 55 years and older without a college degree, leaving the participation rate across that age group down 2pp from before the pandemic. "The increased rate of retirement for these workers has not only continued well into the full reopening of the economy and strong economic expansion, but it also appears to have accelerated somewhat over the past two years," according to the paper by Brandon Miskanic, Nicolas Petrosky-Nadeau, and Cindy Zhao.

The move to retirement from these workers is in contrast to the rebound in participation by older college-educated workers and other age groups, the researchers found. Older workers appear to be stepping back given the greater health risks since the pandemic. (See: MNI INTERVIEW: Fed Highlights Risk of Weakening Job Market)

"If current retirement trends among individuals without a college degree were to reverse, we could see additional growth in workers age 55 and older joining the labor market, providing additional relief to an already tight labor market," the paper said. "If this does not occur, the economy will need to draw in workers from other age groups to accommodate the increased demand for labor. This has been the case over the past couple of years: growth in labor force participation among workers between ages 25 and 54 has outpaced pre-pandemic trends."