The pandemic had spurred many people to take stock of their lives, and focus on what is most important. With a greater “seize the day” attitude, more affluent baby boomers decided to move up their retirement plans to make the most of their golden years. But not all older adults chose to take an earlier than planned retirement, and some weren’t financially ready for the lifestyle change.
According to a recent Pew Research Center analysis, following the 2007-2009 recession, many older adults experience a steep decline in the value of their financial assets and home prices leading older workers to stay in the labor force longer. But during the COVID-19 pandemic, household wealth has been rising, and in most markets, home prices have also increased.
With greater financial stability and changing values, more older adults decided to wrap up their working lives rather than struggle with the ongoing challenges of work-life created by the pandemic. Whether or not the increase in retirement among older adults will be temporary or long-lasting is unknown. The uptick has not been uniform across all demographic groups – while the proportion of older white adults who are retired increased 3 percentage points from the third quarter of 2019 to the third quarter of 2021, the retirement rate of older black adults did not significantly increase. The rate of foreign-born retired adults over the age of 55 also remained unchanged.
Older retired adults who had completed at least a bachelor’s degree increased 3 percentage points between 2019 and 2021 but among adults over 55 who had a high school diploma or less, the rate of retirement increased only 1 point. In the UK, data suggests that older women in jobs like cleaning and hospitality which were hit hard by the pandemic have left the labor market, and many vulnerable older adults have retired early because of health risks.
Whether by choice or not, an estimated 2 million Americans have entered retirement during the pandemic, according to a recent NPR report. Some found they had the financial means to retire comfortably and were ready to opt out of Zoom calls, long hours working from home, or risk exposure to COVID in the workplace. But others forced into retirement may find getting a new job more difficult due to age discrimination. Seniors re-entering the workforce after a time away may also return with lower wages.
Many older adults are looking at the last third of life and prioritizing family, friends, and their community. Moving closer to help adult children with grandkids is a common theme among new retirees, as is volunteering more within their communities. Whether the great retirement surge will reverse itself will depend on what course the pandemic takes and if this disruption is temporary or continues to escalate.