Remember the great worker shortage? It's why there are so many job openings going begging. But where did all the workers go? Nobody seems to know.
Perhaps the explanation is simpler than we think. Maybe it's just that a whole lot of people retired during the pandemic:
That's from Miguel Faria-e-Castro of the St. Louis Fed. The red line represents how many people "should" have retired and the blue line represents how many people actually did. This was done in August 2021, and by now the excess is probably up to 3 million or so.
Faria-e-Castro speculates the the uptick in retirements is due to (a) fear of infection and death, and (b) assets such as homes and stocks rising in value, which made it more feasible to retire.
I'd add another possibility, There were probably a fair number of people who were maybe 62 or 63 at the start of 2020 and then got furloughed or let go entirely when the pandemic hit. They took a look around and decided that by the time businesses started hiring again they'd be 63 or 64 and would have a really hard time finding a new job. So they reassessed their finances and decided that with a little bit of scrimping they'd be OK. Why not just retire now?
But here's another thing. I decided to take a look at a different measure of retirements, namely the number of people applying for Social Security benefits. Here's what it looks like:
This is not the same thing as total retirees, but you'd still expect to see a significant uptick if more people really are retiring. And yet there's nothing. Literally nothing. If you extend the 2017-19 trendline, it passes perfectly through the 2020-21 datapoints. There's not even a hint of an increase.
I dunno. Faria-e-Castro got his data from the monthly Current Population Survey, which ought to be the best source. So why doesn't anything show up in the monthly Social Security signups? And why does the CPS data show an uptick starting in January 2020? If it's pandemic related it shouldn't start until April at the earliest.
It is a mystery.
I’ll speculate:
Yes, numbers of retirements accelerated.
But the increase in asset values you mentioned (investment accounts and houses) meant the newly retired are waiting to apply for SS til later. They don’t need the $$, will get more by deferring.
Just a guess, if it’s wrong for some obvious already-mentioned reason, my apologies.
That's exactly what I was thinking. Since these retirees are voluntary, they may be either not qualified for, already got, or saving up their benefits for later.
I know lots of my friends spent tons less money during the pandemic - if you're saving money not going out, you don't need to take the benefit now.
The fact that Social Security permanently impoverishes those who have to retire early really twists these numbers.
Paying out PTO could help too. Some places you can get 2-3 months worth of time paid out, which also goes further on lowered expenses.
That was my first thought. Cause that’s kinda sorta what I’m doing. Still working and not retiring only so my pensions and social security will be significantly higher.
Get more by waiting.
Interesting.
I am sort of a "bird in the hand" person.
The total expected SS payout is the same for the person who waits as for the person who takes it as soon as possible.
Predicting the arc of your life is difficult.
Take the money and run.
The expected payout from both life insurance and annuities is zero (actually negative, if you allow for insurance company profit and expenses), but that doesn't mean that neither one is ever appropriate. It depends on your situation. If you have reason to think that your life expectancy is below average (e.g., due to poor health), then take Social Security right away. Or the reverse is your life expectancy is good.
A second on the explanation of folks holding off on collecting Social Security.
An anecdote to add about those higher asset values: https://www.npr.org/2022/02/19/1081875948/inflation-has-many-retirees-worried-about-outliving-their-savings
What if those people who were furloughed did not intend to retire and therefor not apply for Social Security? This way the two graphs could be reconciled.
One has a "very hard time" finding a new job when one is fifty (even at times of so called labor shortage); I can't imagine how it is when one is 63.
I had to find a new job a few years ago when I was 51. It took several months, but the job I landed (via a headhunter firm contacting me) is the best paying job I've ever held.
Secrets to job hunting when you are older: don't let them know your age. They won't ask if their HR guidelines are at all sensible. Don't put dates with your college degree and unless the experience is extremely relevant don't include jobs on your resume farther back than 10-15 years. It helps if you are in good physical shape and, without being overly obvious, drop a line or two in the interview about some physical activity you enjoy (I apologized for being slightly sweaty in my first interview after biking to it-- less than a mile from house-- in August.)
Regarding the "baby-boomer trend", I don't expect an accurate projection to be made by "a cubic trend estimated between January 2008 and Feburary 2020," as described in Fario e Castro's paper.If he just did a cubic fit on the data between those dates, the behavior at the endpoints especially would not be very accurate in reflecting actual events.
A polynomial fit without any consideration for what the coefficients actually represent is meaningless. It's using the computer to eyeball a curve, and gives you no basis for extrapolation.
I work in a manufacturing plant where, in pre Covid times, there were 3000 people onsite every day. Most of my older colleagues (60+) have bailed. I’m only 57 so I’m getting to be “senior”. I’m sure management would prefer I quit so they can hire some 22 year old engineer as a contractor for 1/3 of my salary/benefit costs.
Unfortunately for them, I’m holding out for the next “early retirement” package. Shouldn’t be long.
There is no place in industry for anyone over 60. That’s where retirements are coming from… professionals in industry are retiring. It was accelerated by the pandemic at my employer.
Again to emphasize… this is industry / manufacturing not service.
Totally agree. Anyone who thinks age discrimination isn't a thing in the U.S. hasn't reached age 50 yet.
My brother-in-law retired in mid-2020, at the age of 59. He was a high school teacher, and he didn't want to retire, but his wife is immunocompromised, so better safe than sorry.
I think we have a consensus.
I declare this meeting adjourned and propose that we reconvene at the nearest bar with Presidents Day specials. Because George would have wanted it that way.
Didn’t something like almost a million people officially die of Covid so far? I know not all of those million were in the workforce, but surely a significant chunk of them were. And excess deaths are even higher than that, as many states game the official stats. So if suddenly 500K-1M people vanished from the workforce because they, you know, no longer exist… that would represent a good 1% drop in the working population right there.
The majority of deaths in the US have been of people age 65 or older:
https://www.statista.com/statistics/1191568/reported-deaths-from-covid-by-age-us/
Many of the others were probably at risk for other reasons than age and may not have been in the work force.
Another factor to blame for retirement is Obama. If he hadn't passed a healthcare package, there would be a lot of people hanging on for dear life until Medicare kicks in.
I know several people who retired recently and I'm sure that access to relatively cheap health insurance is what enabled them to retire.
Since we're all taking a stab at it, here's mine: many people self-reporting they've retired in lots of cases are either still getting paid (they don't have to come to the office) or are collecting UI. In other words, they've made the decision to retire (and in their own minds they *are* now retired), but an income stream enables them to put off filing for Social Security. Once they're told they must physically come back to the office (or UI runs out) they'll file. So we'll see a biggish spike this year in Social Security filings.
I had intended to retire at 67 or 68, but the work dried up so I retired a few months after I turned 65.
I've been retired 13 months and I haven't applied for Social Security - my wife is working, we have savings and no dependents, and our expenses are low.
PS- I've been on my wife's insurance for years so that wasn't an issue for me.
DISCLAIMER - I worked for the NC Dept of Labor for 20 years but NOT in the wage and hour division but we had access to all their, and US DoL data.
After I started at NCDol the, the US DoL published a paper in the early to mid 90s warning about the Baby boomers retiring. They used estimates and approximations because quite frankly they were guessing at what the 2010s through 2020s would look like labor force wise. BUT UNLIKE the work force and unemployment figures THIS was based primarily on population demographics NOT surveys. I kinda chuckled at the thought of severe labor shortages but I was wrong, and US DoL got it right. The ONLY things they didn't know was that the birthrate would CONTINUE to decline and they never saw COVID coming
They were concerned that the birth rate which had tapered off beginning in the late 60s coupled with a long time boom in the economy would produce labor shortages. Under NORMAL circumstances they estimated that Nursing and truck driving would show shortages first. They believed it would start in the late 2010s and go throughout the 2020s.
COVID made all of it worse.
The raging stock market and huge increases in 401k balances made it worse than COVID did. Add to that the extreme increase in home values. People found they COULD retire early and rather than expose themselves to possibly contracting COVID, they elected to stay away from working.
The problem is that Boomers feel entitled to being waited on and that required going to places that provide SERVICES to the boomers such as hair salons, restaurants and travel destinations (with all the accompanying services ). COVID impacted that greatly.
Reagan, Clinton, Obama and now Biden's EXTREMELY successful job creation policies, , COUPLED with COVID killing older people, along with wealth accumulation by Boomers all played a part in the great retirement, the great Quit, and so on.
The economy will have to rebalance itself as the boomers die off. Demand for certain things will slacken.
But for now LABOR availability will determine the course of the economy - where there's enough labor to fill the jobs? You will have a boom - but until the economy re balances I think labor shortages will drive inflation higher.
It simply means lower growth is better than higher growth.
There are significant advantages to delaying taking Social Security until as late as age 70 - https://www.kiplinger.com/retirement/social-security/601475/3-reasons-to-wait-until-70-to-claim-social-security-benefits
And at least according to this article, more people ARE delayiing - https://www.fool.com/investing/2021/11/26/retirees-are-making-a-smart-social-security-move/
(Also, if you retire at age 61 or younger, you CAN'T start taking Social Security - you need to wait until you reach age 62.
This is not the same thing as total retirees, but you'd still expect to see a significant uptick if more people really are retiring. And yet there's nothing. Literally nothing. ...There's not even a hint of an increase.
"nothing"?
"literally nothing"?
"not even a hint of an increase"?
Uh, the graph shows recent data breaking above the trend line to new highs (~8% above blue-line high, and ~26% above beginning of the series). It's one thing to say more data would be helpful, but to conclude the data shows "nothing" seems kind of ridiculous.
Oh no!
Ivermectin does not prevent severe COVID-19, study finds,
https://www.upi.com/Health_News/2022/02/18/covid-19-ivermectin-treatment-ineffective-study/3441645193314/
We're helpless! The last best hope of man!
More retirements + more olds dying from coronavirus.
BTW my parents retired due to pandemic. They'd probably still be working but they were close enough and took buy outs. They had enough not to draw on SS for now and the buy outs continued their health insurance for another year.