More older Americans are choosing to leave the labor force during the pandemic — for some unemployed workers, it was a decision they couldn’t avoid.
About two million baby boomers have been retiring every year since the oldest turned 65 in 2011, but between the third quarter of 2019 and the third quarter of 2020, that number increased to 3.2 million, said Richard Fry, a senior researcher at Pew Research Center.
“There is evidence that, yes, as a result of the pandemic, the number of boomers retiring accelerated,” he said.
Higher rates of retirement could be detrimental on a personal and societal level.
On a personal level, not everyone who is older and out of the workforce is ready for this lifestyle shift. Some recent retirees may have been planning for this moment, or have had the financial means to leave sooner than anticipated. This is, however, not the case for everyone. Many near-retirees were underprepared for retirement prior to the pandemic, but the crisis has only made situations more dire due to job loss, wage reduction or illness.
For the country, it’s a loss of qualified, experienced workers, Fry said. It could also put pressure on the financial markets, considering these retirees (or long-term unemployed colleagues) will begin to draw down their retirement account balances at larger clips eventually.
If these older, long-term unemployed workers do find jobs again, they may be taking whatever they can get, even if it pays less or does not require the same level of skills as they had in their prior jobs, said Siavash Radpour, the associate research director at the New School for Social Research. “We are afraid that will be the case,” Radpour said.
The alternative is continuing to look for work, but older workers out of a job for two years will find it’s “very difficult to get back to work,” Radpour said.
Thus, there’s retirement — whether it’s prepared for or not.
Older boomers, who are between 65 and 74 years old, were more likely to retire than the younger members of their generation, Fry said. The number of younger boomers who retired in February and September 2020 remained constant at around 18%, but for older boomers, the figures were 64% in February and 66% in September, Fry said.
Hispanic and Asian boomers were more likely to be affected than African American and white individuals during that time frame. Those who were less educated or in the northeastern part of the country were also more likely to see higher rates of retirement.
There are a few reasons they may be exiting the workforce at a higher rate, Fry said. Some may be concerned about the health implications of working, and the risks associated with contracting the coronavirus.
But for others, it might have been the more appealing alternative to a discouraging process of job searching. The pandemic was the first time in half a century that people 55 and older lost their jobs at a higher rate than their younger counterparts, with 17% of workers 55 and up more likely to lose their jobs than their mid-career colleagues, according to the Retirement Equity Lab at the New School.
Job loss can be a potentially devastating event to happen to an older person, especially during a pandemic, as seen in numerous research reports.
Aside from simply not being emotionally ready to leave the workforce permanently, the task of finding another job can last significantly longer than it does for younger hires. Over half (54%) of jobseekers who were 55 or older were unemployed for at least six months in March, AARP found, versus the 41% who were 16 to 54 years old. The year-over-year employment rate for those individuals 55 and older also decreased, from 38.3% in March 2020 to 36.5% in March 2021.
The unemployment rate for the 55 and older crowd did drop 4.5%, according to the Bureau of Labor Statistics, which could be in part the result of a “blockbuster month” with jobs added, said Jen Schramm, a senior strategic policy adviser at the AARP Public Policy Institute. “All those jobs added translates to fewer people who are unemployed,” she said.
Another cause could be that some older workers are still deciding if they plan to reenter the labor force, she said.
“A key unknown is how many of the older workers who left the labor market, especially in the early months when millions of jobs were lost, how many will try to reenter?” The decision to come back could be that they need the money, found an attractive opportunity, or that they’re vaccinated and don’t feel there’s as much of a health risk to go back to work.
Older workers are also more likely to experience age discrimination in the workplace, as well as during the hiring process. In one survey, AARP found 78% of older workers saw or experienced age discrimination in 2020 — compared to 61% in 2018. “The pandemic has increased age discrimination, but also made people more aware of it,” Schramm said.