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Retirements Surge for Older Workers during COVID-19

Maggie Isaacson Federal Reserve Bank of St. Louis

Date Posted:: December 21, 2021
Is Database:: Database

The COVID-19 pandemic accelerated retirement rates among older workers, with the share of retired individuals rising by nearly 2% for those aged 66-70 and 1% for those aged 71 and older.

The COVID-19 pandemic accelerated retirement rates among older workers, with the share of retired individuals rising by nearly 2% for those aged 66-70 and 1% for those aged 71 and older. This trend contrasts with the relatively stable retirement rates for those aged 65 and younger. The pandemic's impact on labor markets, marked by job losses and health concerns, prompted many older workers to retire, contributing to a broader increase in the retired population from 15% in 2006 to nearly 20% in 2021. Despite potential economic recovery, the likelihood of these retirees re-entering the workforce remains low, suggesting a more permanent shift. Consequently, efforts to boost labor force participation should focus on younger demographics, as older individuals show little interest in returning to work.

Maximiliano Dvorkin and Maggie Isaacson on the pandemic's impact on the rate of retirement and the likely difficulty of drawing those workers back into our labor force, "...the proportion of retired people has been rising since 2006, increasing from about 15% in January 2006 to nearly 20% in October 2021. However, this increase was driven by the retirees from the two oldest age groups. The shares of people retired in the two youngest groups remained relatively constant from 2006 to 2021. The vertical dashed line in the figure indicates March 2020, which marks the beginning of the disruptions in U.S. labor markets due to the COVID-19 pandemic. The figure shows that the increase in the share of retired people accelerated during the pandemic, but once again, this is mainly due to retirement decisions of the oldest age groups.... The proportion of people retired has not changed much for those 65 and younger, but it has increased notably relative to the pre-pandemic period for the two oldest age groups: The share of people retired rose by nearly two percentage points among those ages 66-70 and one percentage point among those age 71 and older....To investigate this further, the table below shows the average proportion of people 55 and older who were not in the labor force and who were not looking for a job but wanted one. It examines three different periods: 2019, the year before the pandemic; 2020, the year when the effects of the pandemic were stronger; and 2021, the year when the effects of the pandemic on the labor market eased. The main message from the table is that older people who are not in the labor force have little interest in participating in the labor market. Thus, while retirement of older workers has increased due to the pandemic, this change seems more permanent, and thus it is unlikely the country will see a significant influx of older people into the ranks of the employed. If there is lost ground to be made in terms of drawing more people into the labor force, the attention should be put in the younger segments of the population...."

Maximiliano Dvorkin and Maggie Isaacson, "Retirements Surge for Older Workers during COVID-19," Federal Reserve Bank Of St. Louis, December 20, 2021, https://www.stlouisfed.org/on-the-economy/2021/december/retirements-surge-older-workers-covid19

Retirements Surge for Older Workers during COVID-19

The COVID-19 pandemic has affected the labor market in many ways. In March and April 2020, millions of jobs disappeared, and while employment made up much of the lost ground, levels are still below those of early 2020.

Though the unemployment rate currently is roughly 0.7 percentage points above the pre-pandemic lows, this measure understates the pandemic’s impact on the labor market. There are still 3.9 million fewer jobs since February 2020, and a big part of the “missing jobs” is explained by an increase of people not in the labor force, that is, those that are neither employed nor looking for a job.

While there are many reasons a person may not be interested in working, here we focus on how retirement changed during the pandemic. For this, we used data from the Current Population Survey (CPS), which is the official source of information for labor market participation decisions in the U.S.

Rate of Retirement

The chart below shows the evolution, since 2006, of the share of civilian population age 16 and older that is retired. To adjust for some seasonality and short-frequency volatility in the data, we show 12-month moving averages.

Retirement decisions differ greatly by age. It is rare for young individuals to be retired, while the opposite is true for older people. Because of this, the chart shows the evolution of retirement for four different age groups:

People ages 16-54: those far from typical retirement age
People ages 55- 65: those close to retirement
People ages 66-70: those that just entered typical retirement age
People age 71 and older: those deep into retirement age

Stacking all these groups together shows the evolution of the overall share of population that is retired.

Retirements Surge for Older Workers during COVID-19: Extended Excerpt Image 1

Looking at the figure, the proportion of retired people has been rising since 2006, increasing from about 15% in January 2006 to nearly 20% in October 2021. However, this increase was driven by the retirees from the two oldest age groups. The shares of people retired in the two youngest groups remained relatively constant from 2006 to 2021.

The vertical dashed line in the figure indicates March 2020, which marks the beginning of the disruptions in U.S. labor markets due to the COVID-19 pandemic. The figure shows that the increase in the share of retired people accelerated during the pandemic, but once again, this is mainly due to retirement decisions of the oldest age groups.

Demographic Breakdown

To see this more clearly, the following table shows the proportion of those retired in each of these four age groups. The table’s columns show the average share during three different time periods: pre-pandemic (January 2018-February 2020), the first 16 months of the pandemic and the most recent months since July 2021.

The proportion of people retired has not changed much for those 65 and younger, but it has increased notably relative to the pre-pandemic period for the two oldest age groups: The share of people retired rose by nearly two percentage points among those ages 66-70 and one percentage point among those age 71 and older.

Retirements Surge for Older Workers during COVID-19: Extended Excerpt Image 2

While people’s retirement plans changed due to the pandemic—for example, their business closed, their retirement savings increased due to gains in the stock market, or they did not feel safe returning to work — the main question is whether these changes are permanent or will quickly revert to pre-pandemic levels. These people, while technically retired, could return to the labor market under the right conditions.

Retired for Good?

To investigate this further, the table below shows the average proportion of people 55 and older who were not in the labor force and who were not looking for a job but wanted one. It examines three different periods: 2019, the year before the pandemic; 2020, the year when the effects of the pandemic were stronger; and 2021, the year when the effects of the pandemic on the labor market eased.

Retirements Surge for Older Workers during COVID-19: Extended Excerpt Image 3

The main message from the table is that older people who are not in the labor force have little interest in participating in the labor market. Thus, while retirement of older workers has increased due to the pandemic, this change seems more permanent, and thus it is unlikely the country will see a significant influx of older people into the ranks of the employed. If there is lost ground to be made in terms of drawing more people into the labor force, the attention should be put in the younger segments of the population.

3% vs. 60%

Torsten Sløk Apollo

Date Posted:: April 8, 2026
Is Database:: Database

Torsten Sløk notes the direct lending market is ~$2T or 3% of household and non-financial debt outstanding. To provide context, he shows that in 2006, on the eve of the crisis, mortgages accounted for ~60% of such debt.

The direct lending market is roughly $2 trillion, or about 3% of total debt outstanding for US households and businesses. By comparison, mortgages accounted for about 60% of total household and corporate debt at the peak of the housing bubble in 2006.

Takeaways by Macro Roundup^® AI

Direct lending represents a small but growing alternative to traditional bank financing for businesses and households.
The mortgage market’s dominance has shifted dramatically since the 2006 housing peak, reducing systemic risk concentration.
Non-bank lenders now capture meaningful market share in credit provision across the economy.

Top 10% of Earners Drive a Growing Share of US Consumer Spending

Jonnelle Marte Bloomberg

Date Posted:: September 17, 2025
Is Database:: Database

Mark Zandi finds Americans in the top 10% of the income distribution accounted for 49.2% of consumer spending in Q2, the highest level since 1989.

Consumers in the top 10% of the income distribution accounted for 49.2% of total spending in the second quarter, up from 48.5% in the first quarter, reaching the highest level in data going back to 1989, according to an analysis of Federal Reserve data by Mark Zandi, chief economist for Moody’s Analytics. In contrast, the bottom 80% of the income distribution, or consumers making less than roughly $175,000 a year, have seen their spending merely keep pace with inflation since the pandemic.

Litigation Nation, Engineering Empire

Jonathon Sine Cogitations

Date Posted:: September 2, 2025
Is Database:: Database
Is Important:: Important

Jonathon Sine argues China “is moving beyond its breakneck industrial prime, facing similar dilemmas to those America confronted in the 1960s and 70s.” The ratio of science/engineering to humanities undergraduate majors is 2:1 in both the PRC and US.

Dan Wang’s “big idea” [is] “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.” I re-group US college majors according to Chinese disciplines to allow for rough comparison. Surprisingly, the ratio of science/engineering to humanities/social sciences is 2:1, the same as in China (if one groups management with science/engineering, as I also do for China). As with China today, America’s breakneck building phase was decidedly winding down by the 1960s. Urbanization went from 40% in 1900 to 70% by 1960, and grew much more incrementally over the next 60 years to 85% by 2020. The country simply did not need to continue building dams, expressways, and energy production facilities at breakneck pace. It became much more a matter of maintaining and upgrading (which has not gone well, at least according to the American Society of Civil Engineers’ report card). The American [building/investment slowdown that started after the 1970s] may be more about structural economic shifts than lawyers.

How America’s AI Boom Is Squeezing The Rest Of The Economy

Economist Staff The Economist

Date Posted:: August 19, 2025
Is Database:: Database
Is Important:: Important

As AI-related investment has risen since 2023, residential and nonresidential investment have declined or flatlined. This may suggest that a relatively rate-insensitive AI buildout is crowding out more interest-sensitive forms of investment.

Something like a sixth of the 2% rise in American real GDP over the past year has come from investments in computer and communications equipment, including chips, and data centres. Add in the grid upgrades to power AI models, plus the intellectual-property value of the software itself, and one estimate puts the boom’s contribution to real GDP growth at 40%. The trouble is that the very sector powering so much of America’s economic growth is squeezing the rest of its output. Housebuilders, for instance, cannot afford to be blithe about higher borrowing costs. Data centres have also constrained the rest of the economy by keeping energy prices high. Average American electricity bills have risen by 7% so far in 2025, at least in part due to the extra strain data centres have put on the grid. Real consumption has flatlined since December. Housebuilding has slumped, as has non-AI business investment.

Is it Over?

Joseph Wang Fed Guy Blog

Date Posted:: August 18, 2025
Is Database:: Database

Following tepid reactions to the release of GTP-5, Joe Wang observes, “It is looking more like companies are spending hundreds of billions on rapidly depreciating GPUs that produce a commoditized product that most clients only modestly benefit from.”

GPT-5 users widely expressed disappointment in the capabilities of the new release, which seemed in some ways a step back. This sentiment is reflected in benchmarks that show a modest improvement in capabilities since the significant improvement in version 4 released two years ago. In addition, the benchmarks suggest a broader convergence in the capabilities of AI models. Commentary suggests this could be due to inherent limitations in the LLM technology and exhaustion of new training data. AI is fascinating technology, but it may not justify the enormous sums spent in its pursuit. It is looking more like companies are spending hundreds of billions on rapidly depreciating GPUs that produce a commoditized product that most clients only modestly benefit from. The entire macro landscape would look very different without the support of the AI boom.

US Households and Firms Are in Great Shape

Torsten Sløk Apollo

Date Posted:: March 31, 2025
Is Database:: Database

Torsten Sløk notes that US household and banking sector debt has fallen to its lowest level in decades as a % of GDP, while corporate leverage has moved sideways. “The bottom line is that the private sector in the US is in incredibly good shape.”

Household sector leverage and banking sector leverage have declined significantly since 2008. Over the same period, federal government leverage has increased significantly, and corporate leverage has moved sideways. The bottom line is that the private sector in the US is in incredibly good shape.

The COVID-19 pandemic accelerated retirement rates among older workers, with the share of retired individuals rising by nearly 2% for those aged 66-70 and 1% for those aged 71 and older.

Torsten Sløk notes the direct lending market is ~$2T or 3% of household and non-financial debt outstanding. To provide context, he shows that in 2006, on the eve of the crisis, mortgages accounted for ~60% of such debt.

Takeaways by Macro Roundup® AI

Related Articles:

Mark Zandi finds Americans in the top 10% of the income distribution accounted for 49.2% of consumer spending in Q2, the highest level since 1989.

Related Articles:

Jonathon Sine argues China “is moving beyond its breakneck industrial prime, facing similar dilemmas to those America confronted in the 1960s and 70s.” The ratio of science/engineering to humanities undergraduate majors is 2:1 in both the PRC and US.

Related Articles:

As AI-related investment has risen since 2023, residential and nonresidential investment have declined or flatlined. This may suggest that a relatively rate-insensitive AI buildout is crowding out more interest-sensitive forms of investment.

Related Articles:

Following tepid reactions to the release of GTP-5, Joe Wang observes, “It is looking more like companies are spending hundreds of billions on rapidly depreciating GPUs that produce a commoditized product that most clients only modestly benefit from.”

Related Articles:

​​Torsten Sløk notes that US household and banking sector debt has fallen to its lowest level in decades as a % of GDP, while corporate leverage has moved sideways. “The bottom line is that the private sector in the US is in incredibly good shape.”

Related Articles:

Takeaways by Macro Roundup^® AI

Torsten Sløk notes that US household and banking sector debt has fallen to its lowest level in decades as a % of GDP, while corporate leverage has moved sideways. “The bottom line is that the private sector in the US is in incredibly good shape.”