Posts Tagged "age 62"

COVID Hasn’t Pushed Boomers into Retiring

Three months into the pandemic, a few million older workers had been laid off or quit. But what happened next?

The rapid drop in employment due to COVID gave the Center for Retirement Research an unusual opportunity to study the labor force decisions of baby boomers, who are within striking distance of retirement age but may or may not be ready to take the leap.

Traditionally, older workers who left a job tended to retire. But there was little indication that the people who stopped working during the pandemic saw retirement as their best fallback option.

This conclusion by the researchers is consistent with the pre-COVID trend of boomers working longer to put themselves in a better financial position when they eventually do retire. In fact, many older workers have returned to the labor force as the economy has rebounded and vaccines have become widely available.

Little impact on older workers retiringBut in April 2020, job departures spiked before settling back down at a new, much higher level. The annual pace of departures increased from 15 percent of workers 55 and over in 2019, prior to COVID, to 23 percent in 2020.

The researchers found a surprise when they looked at who stopped working. Although older people are vulnerable to becoming seriously ill from COVID, age wasn’t a big factor in their decisions. Boomers in their 60s were no more likely to leave their jobs than people in their mid- to late-50s, according to the analysis of monthly Census Bureau surveys.

The groups most likely to leave the labor force were women, Asian-Americans, and workers who either don’t have a college degree or don’t have a job that easily lends itself to working remotely.

But among all of the age 55-plus workers in the study, the share reporting that they had retired barely increased, from an average of 12 percent prior to COVID to 13 percent last year.

The only people who left their jobs and retired in significant numbers during the pandemic were over 70. This finding reinforced what the researchers found in data from the U.S. Social Security Administration: the pandemic didn’t have a major impact on retirement because the share of workers between 62 and 70 who signed up for Social Security was relatively flat between April 2019 and June 2021. …Learn More

Retirement blocks

Change to Social Security Impacts Decisions

In 1983, Congress introduced gradual increases in the eligibility age for full Social Security benefits from 65 to 67. The increases, starting in 2000 and continuing today, have meant larger reductions in the monthly checks for people who sign up for their benefits early.

This was a major cut to Social Security benefits, and it has had an impact. Retirement rates have declined among workers in their early 60s as they delayed retirement to make up for the larger penalties for claiming their benefits early, a new study found.

Estimating the effect of this change on retirements is challenging, so the researchers compared actual retirement rates after the reform with their estimates of what the rates would’ve been if Congress had not increased the full retirement age. They also calculated the retirement rates a few different ways. Their main estimate, based on three decades of U.S. Census data, was notable, because it showed a substantial decline in retirements at age 62, which is the first time workers can collect Social Security – and the age that exacts the biggest penalty in the form of a smaller monthly check.

At ages 63 to 65, the penalties for claiming early shrink – and the effect of the reform was less noticeable.

But the main estimate of retirement rates – the incidence rate – showed that the 1983 increase in retirement penalties had a significant impact on 62-year-olds. The incidence rate is the number of people in a given year who retire at 62 as a percentage of everyone in their birth cohort.

The results showed that 10 percent of the men – all workers born after 1937 – left the labor force when they were 62. That’s about 5 percentage points less than the rate would’ve been without the reform.

For women, the incidence rate at 62 was 8.4 percent, which is about 2 points less than if there had been no reform. Their response may have been more muted because women retire for different reasons than men. …Learn More