Thomas Barwick | digital vision | fake images
Retirees have re-entered the workforce at a steady pace in recent months, lured by an active job market and reduced health risks from Covid.
This “no retirement” trend could help increase the pool of available workers and ease the hiring challenges companies have reported.
As of April, 3.3% of people who retired a year earlier are now employed, meaning about 1.7 million people were “not retired” during that time, according to Nick Bunker, economist at Job Site Indeed, which analyzed data from the federal agency. Current Population Survey.
And that proportion has been increasing since the late summer of last year. It was around 2.4% last August and 2.8% in January, for example, according to Bunker’s analysis.
Now, the percentage is roughly equivalent to pre-pandemic levels at the end of 2019.
“As covid appears to be winding down, the labor market is still strong and nominal wage growth is still quite high; that is attracting people to look for work,” Bunker said.
The ‘Great Retirement’
There was an exodus of workers towards retirement in the first months of the pandemic.
The so-called “Great Retirement” outstripped the predicted flow of baby boomers’ demographic shift into retirement, according to the Federal Reserve Bank of St. Louis. There were an additional 3.3 million (or 7%) retirees in October 2021 than in January 2020, the economists estimated.
Older Americans, who were at higher risk of severe illness and death from Covid-19 before the advent of vaccines, were motivated to retire if they had the financial ability to do so.
Up to that point, 25% of adults who retired in the past 12 months (and 15% of those who retired in the past one to two years) said COVID-19-related factors contributed when they retired , according to a family of the Federal Reserve. Report published this week. (The report reflects financial circumstances in late October and early November of last year.)
In addition, the value of stocks and homes rose to record levels last year, which may have helped ease the financial burden for those choosing to retire. The federal government also issued three rounds of stimulus checks to households in 2020 and 2021.
More on Personal Finance:
Why 2022 has been a dangerous time to retire
This low-risk 401(k) investment can protect your money
Are you struggling to pay bills in retirement? Resources can help
“These stronger balance sheets, in turn, likely created a path to retirement for many workers,” William M. Rodgers III and Lowell Ricketts, economists at the Federal Reserve Bank of St. Louis, wrote in January.
But now, with the rise of Covid-19 vaccines, some people may not withdraw due to reduced health risks. Nearly 91% of people 65 and older are fully vaccinated, 24 percentage points higher than the 67% rate for all Americans, according to the Centers for Disease Control and Prevention.
Additionally, stocks and bonds have been doing poorly in 2022, perhaps prompting retirees to re-enter the workforce for extra income.
Meanwhile, it has been an attractive market for job seekers in general. Job openings hit a record 11.5 million at the end of March, suggesting extremely high demand for labor among businesses.
Hourly wages (before inflation) increased 6% over the past year for the typical worker, more than at any point in the past 25 years, according to the Federal Reserve Bank of Atlanta, which has tracked data going back to 1997. Companies have found themselves competing for talent and being forced to raise wages.
Of course, it’s not clear if the non-retirement trend will continue.
To be sure, there are signs that the labor market may be starting to cool amid moves by the Federal Reserve to apply the brakes on the US economy.
Many of those who retired during the pandemic are still young enough to re-enter the job market, according to the Federal Reserve Bank of Kansas City.
The number of retirees as of February 2020 included 700,000 people under the age of 60; 500,000 from 60 to 67 years old; and 1.6 million ages 68 to 75, according to the analysis, released in August.
“Many of those who postponed their plans to re-enter the workforce still have time to do so when the pandemic is over,” according to the authors, Jun Nie and Shu-Kuei X. Yang.