A generation ago, one popular song implored workers to tell their bosses to “Take This Job and Shove It.” Judging from how many Americans are choosing retirement, millions are taking that advice.
Economists long expected the share of retirees in the population to soar as baby boomers aged. Covid-19 then caused the number to spike well beyond expectations, a surge dubbed the “Great Retirement Boom.” But just as they seemed to be coming back down, the numbers surged again in recent months, reaching a post-pandemic record in December.
The US now has around 2.7 million more retirees than predicted in a model designed by Miguel Faria-e-Castro, an economist at the Federal Reserve Bank of St. Louis.
Financial market performance looks to have played a role. The gap in the model appeared to be closing earlier last year following a 19% drop in the S&P 500 in 2022. But in 2023 the index rebounded, jumping 24%, with most of the gain coming in the fourth quarter. On top of that housing across the vast majority of US metro areas continued to rise last quarter, bolstering the wealth of older Americans.
Expectations for interest-rate cuts from the Fed this year, along with a decline in inflation, may also have prodded more to retire while convincing those already retired they needn’t return to the workforce.
Employers may also be tipping others into retirement by toughening their work-from-home rules and pressuring workers to spend more time in the office.
The labor force participation rate for workers age 65 and older is holding at its post-pandemic average of 19.1%. In the year before the pandemic, it stood at 20.2% — more than a percentage point higher.