Millions of people have retired during the pandemic, but the option of older workers to retire is not equally shared across population groups. For every worker that has a choice to leave the labor force when job opportunities disappear, many other workers lack that opportunity. It often comes down to having enough savings to supplement one’s Social Security checks.
Retirement increased during the pandemic. According to the Bureau of Labor Statistics’ Current Population Survey, the number of retirees grew substantially from February 2020 to September 2021. An additional 3.1 million people 65 years old and older indicated that they were retired in September 2021 as compared to before the pandemic started.
This retiree bump happened against the backdrop of an aging society. More and more people turn 65 every single day and many decide to retire. These trends did not stop because of the global pandemic. But even after accounting for the growth in the number of people over 65 years old and older, retirement accelerated during the pandemic. The share of people 65 years old and older, who were retired, also went up by 0.8 percentage points from 2019 to 2020 and by another 0.7 percentage points from 2020 to 2021. In the two years preceding the pandemic, the share of retirees among older Americans actually fell by 0.2 percentage points and 0.4 percentage points, respectively. The pandemic brought a changing retirement trend for much of the population.
This changing trend is not universally shared across population groups, though (see figure below). For example, the retiree share of those 65 years old and older by education grew at the fastest rate among those with a college degree, while the retiree share among those 65 years old and older without a high school degree was essentially flat. And, while almost all racial and ethnic groups of older people saw an increase in retirees in 2020, retirement declined American Indians and Native Alaskans during the pandemic. Moreover, the pace of retirement varied by race. The retiree population still grew at a substantial rate for White and Asian populations in 2021, but slowed for Black and Latino populations. Finally, retirement accelerated among women in 2021, but slowed among men at the same time. The movement into retirement differed to a large degree along predictable lines.
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Retirement trends tend to correlate with financial resources prior to the recession. Those groups that tended to have more wealth before the pandemic were also the ones to see sharper increases in retirement. This is especially true for people with a college degree and White workers. The median wealth of college educated households near retirement, from 55 years to 64 years old in 2019, was $712,250, compared to $16,530 for households without a high school degree in the same age group. Near-retiree White households had median wealth of $283,760 compared to $39,840 for Black households and $142,200 for Latino households. Having money to fall back on to made it easier for many well-educated and White households to leave the labor force when jobs disappeared than was the case for others.
The groups that were less likely to retire experienced higher unemployment rates. The unemployment rate for White workers who were 65 years old and older was 4.5% in 2021, while that for older Black workers was 6.9% and that for older Latino workers averaged 6.5%. Unemployment was harsher on older unemployed workers on average who needed to look much longer for a new job – 37.1 weeks in 2021 – than was the case for younger workers. The average length of unemployment for people 35 to 44 years old was 31.1 weeks in 2021. The struggle to find a new job for many will push retirement out even further into the future, as many depleted their savings during their job search. Retirement was simply not an option for many of those with fewer (or no) savings.
That said, some workers did decide (or need) to retire, even without enough savings. They may have simply given up looking for a new, better paying, or safer jobs amid a once-in-a-century pandemic. And this situation translated into financial hardships for large numbers of retirees. For example, 28.2% of retirees 65 years old and older without a high school degree had trouble paying all of their expenses, compared to only 7.2% of those with a college degree (see figure below). Black retirees 65 years old and older are also more likely to be unable to pay all of their bills than is the case for White retirees – 24.0% compared to 11.0% (see figure below). The storyline that a booming stock and housing market made retirement more appealing only applies to some lucky retirees. They are more likely to be college educated, White or men.
The pandemic has led many older workers to move into retirement. For some, this was a choice, afforded by a bump in savings amid stock and house price booms. Many others, though, retired with limited savings in a job market with few employment options. The pandemic highlighted the risk inherent in counting on the ability to work longer or past “traditional” retirement age, which was often a retirement plan before the pandemic decimated jobs for older workers. Retirement during the pandemic truly was a split narrative that meant financial insecurity for many older retirees.