NewsWire: 8/12/22
The NewsWire will be taking a summer break between August 13-27. We will resume publishing on August 29.
- Since 1991, the average U.S. retirement age has risen four years to 61. Most recently, however, the share of Americans in older age brackets who are working has largely stopped growing. (Gallup)
- NH: Gallup has been asking Americans about their actual and expected retirement ages since 1991. The latest data show that over the past three decades, the average retirement age has risen from 57 to 61, and nonretirees’ target retirement age has risen from 60 to 66. In addition, Gallup also tracks the share of U.S. adults who are retired by age group and offers us a good perspective on how retirement by age has been trending over the past twenty years.
- There are two big takeaways from the Gallup data. First, Gallup’s retirement age tracker shows the one-two impact of the pandemic. In 2021, the expected retirement age fell by two years. The actual retirement age also rose by one year.
- How can this be? We know that the pandemic led to more people retiring. (See “Pandemic Forcing Boomers Into Retirement.”) This group was weighted towards older, 65+ Americans with less education--in other words, those more likely to be employed in low-earning professions where social distancing wasn’t possible. This pushed up the average retirement age. But among nonretirees, it’s likely that retirement expectations got younger because people who wouldn’t have otherwise considered retiring saw it as a possibility given the uncertainty of the pandemic. That pushed down expectations. In 2022, both series returned to their earlier values.
- Second, the data throw cold water on the CBO’s predictions about future employment growth among older Americans. (See “CBO Projects an Aging and Slower-Growing Economy.”) The CBO has long assumed that the LFP will climb indefinitely among 50+ age brackets. This assumption raises its projections of the future real GDP growth.
- It does this again in its most recent long-term projections, published last week.
- Notice that the CBO expects the LFP at ages 65-69 to grow over the next decade by well over 10%; at ages 70-79 by over 20%; and at ages 80-89 by over 70%.
- But these predictions simply aren't backed up by actual labor force trends. BLS data indicate that while LFP among the 55+ increased sharply from 1990 to 2010, it remained flat for the next decade before dropping sharply when the pandemic hit. 55+ LFP remains nearly 2 percentage points lower than what it was at the end of 2019.
- The Gallup data gives us even more reasons to be dubious about the CBO's assumption. For one thing, the age at which Americans expect to retire peaked all the way back in 2012. Their actual retirement age peaked in 2014. Since then, these numbers have not risen any further.
- What’s more, Gallup’s data on the share of U.S. adults who are retired by age group show that in recent years, the trend towards later retirement has been slowing. Americans who are 65+ are not any less likely to be retired now than they were seven years ago.
- Though the shares of retired adults in older age brackets fell in 2002-2007 and 2008-2015, the decline stopped in the latest 2016-2022 period. For the 70-74 age group, in fact, it has reversed. A higher share of 70- to 74-year-olds is retired (83%) now than was in 2008-2015 (80%). The only age groups that have seen consistently large declines in retirement rates over all of these periods are younger: the 55-59 and 60-64.
- All of this suggests that the GDP gains we would expect from older people working past age 65+ have already been achieved. We are not likely to see them extend indefinitely into the future. If anything, we’re beginning to see them go in the other direction. I’ve said before that the CBO’s LFP predictions for older workers are unrealistic and unwarranted. But these numbers make clear just how unrealistic they are.
| To view and search all NewsWires, reports, videos, and podcasts, visit Demography World. For help making full use of our archives, see this short tutorial. |
