There were 3.3 million, or 7 percent, more retirees in the United States as of October 2021 compared to January 2020.
The surge in U.S. retirements during the Covid-19 pandemic was led by older White women without a college education, according to research by the St. Louis Federal Reserve.
The so-called Great Retirement trend that saw workers leave the labor market — whether forced or by choice — was driven by baby boomers aged 65 and older, the regional Fed bank wrote in a recent blog post. By contrast, retirements among those aged 54 to 65 was little changed.
Overall, there were 3.3 million, or 7%, more retirees as of October 2021 than in January 2020, a number that exceeds the expected demographic shift of the large baby-boomer cohort out of the labor force.
Here are some of the other findings:
Who are the pandemic retirees?
- Female workers were more likely to retire than men, especially among those older than 65
- White workers were more likely to retire than Black, Hispanic and Native American peers
- Asian Americans were slightly more likely to retire than White workers of similar ages
- Workers who were married or widowed were more likely to retire than their never-married, single peers
- Workers with high-school diploma or less education were more likely to retire than peers with at least some college education
- Veterans were more likely to retire than nonveterans, especially among those aged 65 to 74
Pathway to Retirement
Americans retired early for many reasons during the Covid crisis, 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 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.
Unlike in other developed countries, retirement isn’t necessarily a permanent shift in the U.S. It’s not uncommon that Americans “un-retire” and return to the job market, out of financial hardship or personal choice.
The Covid retirement boom has changed that dynamic. Many retirees haven’t been swayed to return due to pandemic-related health risks, according to research by the Kansas City Fed.
“We find that the current increase has mainly been driven by a decline in the number of retirees rejoining the labor force,” Jun Nie and Shu-Kuei X Yang, economists at the regional Fed bank, wrote in a report last year.
“Even if monthly transitions from retirement to employment return to their average pace in 2018–19, it will take more than two years to fully unwind the recent increase in the retirement share,” they wrote last August.
Their analysis was conducted before the arrival of the omicron variant, which has proved more contagious than previous waves and could further dissuade retirees from returning to the workforce.