The last 12 months have seen a profound increase in the number of Baby Boomers exiting the labor market, according to research recently published by the Pew Research Center.
And, perhaps most noteworthily, there’s been an especially sharp increase in the number of Boomers retiring before they reach the age of retirement and, crucially, before they are eligible for full Social Security benefits.
It should also be noted that this trend is particularly pronounced among Asian American and Hispanic Boomers, in addition to those residing in the Northeast.
There’s also significant variation based on education level, with Boomers with a college degree being impacted far less severely than those without education beyond high school.
Specifically, in the third quarter of this year, roughly 28.6 million Baby Boomers were out of work, compared to the 25.4 million just 12 months prior. In other words, some 3.2 million Baby Boomers entered retirement in a single year, compared to the recent average of 2 million Boomers exiting the workforce per annum.
What’s Behind Baby Boomer Early Retirement Trend?
As with most things these days, the COVID-19 pandemic has unquestionably played a role in pushing a greater number of Boomers into retirement, often prematurely. After all, all age groups and most industries have been hit with redundancies as a result of the pandemic.
And, as Boomers are already nearing retirement, many decided to throw in the towel early, especially as some of the changes the labor market is currently experiencing are structural, and many companies are hesitant to invest in retraining workers who will, at best, only work for them for a few more years.
However, only 1.2 million of the 3.2 million new Boomer retirees left employment since February of this year – when the pandemic began to escalate in parts of Europe and the US – so there’s clearly other factors at play.
For example, it’s possible that due to random luck, there was an irregularly large number of Boomers who hit the age of retirement over the last 12 months.
But, looking back at the comparison mentioned just above, it should be stressed that there is usually an element of seasonality when it comes to Boomers entering retirement – and the 1.2 million Boomers who entered retirement over the last 9 or so months compares to just circa 250,000 Boomers who retired from February to September last year.
A Quick Summary
- Every year, a couple of million Baby Boomers retire in the US, but the last year saw over 50 percent more Boomers than usual exit the labor force, according to research by the Pew Research Center.
- In some cases, Boomers opted to retire before they hit the age of retirement and before they were eligible for full Social Security benefits.
- This trend was particularly profound among Boomers living in the Northeast and those of an Asian American or Hispanic ethnicity.
- Specifically, around 3.2 million Baby Boomers retired from work in the last 12 months.
- This acceleration was due to the COVID-19 pandemic, in part at least, as many Boomers lost their jobs and livelihoods and opted to retire instead of retraining.
- However, it remains to be seen how many Boomers will decide to reenter employment once the pandemic passes and the labor market recovers.