Jeffrey Grimley managed to keep his dentistry practice open through much of the pandemic, putting in a restricted schedule for longtime patients. But when one of his best employees had to quit to attend to child-care needs because of Covid-19, Grimley decided to sell his practice in the Chicago suburbs two years earlier than planned.
“The staffing issues were the tipping point, and the market had rebounded nicely—and I was approaching the day of financial freedom,” says Grimley, who turns 65 next year. “One of my buddies from high school would say, ‘I don’t want you dying at the chair with a drill in your hand.’ The pandemic re-established priorities.”
Grimley is part of an exodus of older Americans from the labor force during the pandemic that has contributed to an overarching labor shortage. Baby boomers—the 70 million-plus cohort born from 1946 to 1964—have been in the midst of a retirement boom for more than a decade, but the pandemic has accelerated it, contributing to the labor shortage and complicating the inflation picture for the Federal Reserve, as well as requiring a redo of the retirement calculus for even those individuals who have hit their savings goals.
There were slightly more than three million excess retirements during the pandemic as of August beyond the demographic trend already under way, estimates St. Louis Fed economist Miguel Faria-e-Castro. Fewer people plan on working longer, as well, with only 32% of Americans expecting to stay on the job beyond 67 and just half beyond 62, according to a July survey by the New York Fed.
There was an 8% decline in the labor-force participation rate for those 65 and older from February 2020 to September 2021, when the rate sat at 19.2%. That contrasts with longer-term trends: The participation rate for older adults steadily rose over the past two decades to 20.8% in February 2020 from 12.9% in 2000 as they worked longer to shore up retirement security.
One reason for the wave of retirements: The economic downturn was brief and came amid booming stock and real estate markets. But only a small swath of the population is fortunate to be able to retire on its own terms.
Some people who lost their jobs or left them because of Covid-related issues, including caregiving, would rather still be working. And not everyone has a retirement savings portfolio or home equity to fall back on. More than half of households headed by someone 60 to 65 still hold substantial mortgages; a quarter of those households don’t own their homes, and roughly 31% of them have no savings in 401(k) or 403(b) plans, individual retirement accounts, or pensions, according to Teresa Ghilarducci, a professor of economics and policy analysis at the New School who also leads the Retirement Equity Lab.
Economic Reverberations
For the economy, the rush of older workers opting to retire…
Read More: Retiring Early Is Looking Easier. Here’s How to Do It With No Regrets.