A whole lot of folks who were close to retirement went ahead and pulled the lever early after the pandemic hit:
By the end of 2022 retirements peaked at about 2.95 million extra retirees compared to standard projections. Then excess retirements declined in April to about 2.4 million above projections. The authors suggest this may explain some of the weirdness in the labor market:
Excess retirements are still well above our predicted trend, which may be contributing to a continued tightness in the labor market and low unemployment rate since the recovery from the pandemic recession.
In other words, the labor market has gotten tighter in relative terms thanks to excess retirements. However, because these people were close to clocking out anyway, it may not be affecting productivity or economic growth much. I'd say it's possible this could explain some of our recent economic weirdness, but I'm a little skeptical since we see similar dynamics when we look solely at prime-age workers where retirement isn't a factor.
Next?
What I don't see people recognizing is that the "Baby Boom" was followed by the "Baby Bust" and therefore as boomers retire there are far fewer senior replacements of similar experience and expertise. Thus each boomer retirement creates a demand for about two new workers.
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What economic weirdness?
It sure looks like symptoms of market consolidation and oligopolies all over the place, with a side of housing-as-investment-asset.
I am among that host. During Covid I got used to working from home; taking a walk in the morning instead of a long, aggravating commute; and being more productive because of fewer non-essential meetings, interruptions, etc. I was several years from retirement, but my mutual funds had performed so well, that I took the money and ran. I lost 20 lbs, my blood pressure dropped substantially, and I slept like a baby. My wife was working from home, so I helped her do her work. It's been 3 years and I haven't had a single regret about retiring then, or a day of boredom. If you can, do it, and don't look back.
I recall seeing this labor tightness predicted for the early 2020's maybe 20 years ago, because of demographic trends.
However, first the Great Recession slowed down retirement rates, then the pandemic accelerated them, bring us back to basically a nominal state of affairs.
I think a bit of labor tightness is probably good.
Beyond the pandemic - there were lots of early retirements last year because of the rise in rates also. Many old traditional pension plans have cash options which changed their discount rates with the rates rising. I know people that would have lost around 20% or so of their value if the waited to retire after fall of last year.
Here is some anecdata. I was part of the tech layoffs back in February. Despite only being 55 I didn't even try to look for another job in tech even though I had outplacement assistance. There were too many other people in the same situation. Also after having more time at home with my wife during covid, I decided I'd rather spend more time doing that while I am still in reasonably good health. I am not retired I am just not employed by anyone. I wonder how I would show up in the data.
As a bonus, much like Jimbo's experience, I have lost some weight and my blood pressure is better. Because we own 10 acres about 30 minutes from DC we are experimenting with becoming market farmers and selling various handmade items from a farmstand. All the outdoor time and physical labor from the garden has probably even upped that reasonably good health I started with, to just plain good health. Also due to being laid off and being over 55* I am allowed to tap into my 401k without penalty. I have to admit that knowing there is a backstop if I spend through all my regular savings and the farmstand does not work out definitely had an impact on my decision.
* technically I am not 55 for another 4 days but because it is happening in the year I was laid off it counts.
1) As others have noted, demographers were anticipating this. Baby boomers started hitting 65 in 2011.
2) There was a huge denial that the COVID labor shortage had anything to do with retirements when it obviously did. A good example was that the Washington ferry service had a massive crew turn over as older workers retired and there was no cohort of younger workers available. They are just now restoring full schedules.