Retirement & Financial Planning Report

One reason people may have felt comfortable retiring in 2020-2021 was “rising asset values” in their homes and stock market investments. Image: G.Tbov/Shutterstock.com

The pandemic has caused more people to retire than ordinarily would have been the case but that effect was mostly seen on those already at least age 65 and some of those who left the workforce may yet return, a report for Congress has said.

The pandemic’s impact on retirement rates is being studied closely for its impact on programs such as Social Security and Medicare, which already are experiencing higher enrollment rates — and the associated spending levels — due to the aging of the Baby Boom population.

The Congressional Research Service study, which adjusted the data to account for that population bulge, found that retirement levels had declined steadily over 20 years, with for example 80.2 percent of those age 70-74 retired at the outset but only 73.5 percent at the start of 2020. The rate for those 65-69 fell from 67.9 to 56 percent in that time and that of those 60-64 from 38.2 to 25.5.

(The study defined “retired” to mean those who have both exited the paid labor force and who have started receiving income from Social Security, pensions, and/or retirement savings accounts—although it noted that by some definitions only one or the other is required.)

It said that research by others has pointed to factors in that time such as the increase in the Social Security “full retirement age” (FRA); the elimination of the Social Security earnings test for those at FRA or older and the increase in the delayed retirement credits for those who claim benefits after FRA; the change in the pension landscape from one comprised primarily of defined benefit plans to one comprised primarily of defined contribution plans; the improvement in health; the decline in mortality rates; the change in job characteristics; and others.

However, that trend “was paused or slightly reversed for some older age groups after the COVID-19 outbreak began” for reasons including the increased risks to older persons from contracting the Coronavirus and a desire to avoid contacting additional people through work.

“The pandemic reversed the declining trend slightly for relatively older age groups (those aged 65-69 and 70-74) but not for the 60-64 age group,” it found: as of March 2022 the rates for the first two groups had increased to 76.4 and 57.5 percent—up 2.9 and 1.5 percent, respectively—but for the youngest group it fell from by six-tenths of a point to 24.9 percent.

“Many of these new retirees may decide to return to work depending on personal factors and aggregate market conditions,” it added, noting that one reason people may have felt comfortable retiring in 2020-2021 was “rising asset values” in their homes and stock market investments.

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