Recent data indicate that Baby Boomers are now retiring in droves. As reported by Bloomberg, the number of Americans aged 65 or older that aren’t in the labor force rose by 800,000 during the fourth quarter of 2016. The pace of retirement in America has been heading higher for more than five years. There are many implications stemming from this massive pace of retirement, including for the U.S. labor force participation rate, which continues to be suppressed by retirement and remains near a four-decade low.
The labor force participation rate for those 65 or older declined by a full percentage point during the final quarter of last year to less than 24 percent. There are also implications for the movement of households. Perhaps it’s no coincidence that for much of the past year, Florida has been adding jobs at a faster pace than any other state as retirees move there in large numbers.
There are also many possible explanations for the recent uptick in the pace of retirement. A surging stock market has perhaps persuaded many households that income from work is no longer necessary. The severe economic downturn that took place between 2007 and 2009 represents another explanatory factor. Many Baby Boomers were forced to postpone planned retirement at that time in order to rebuild crushed nest eggs. But with home and stock prices bouncing back in recent years, the time to retire has finally come for many.