Research

A Tale of Two Retirements

December 7, 2021

Working Paper—This paper explores how Covid-19 affected the employment and retirement patterns of older workers, with special attention to the distribution of pandemic impacts on those 55 and older.

Author: Owen Davis

The Covid-19 pandemic dealt an unprecedented shock to older workers and led to a sharp increase in the share of U.S. adults who are retired. Employment declines among older workers were greatest for low earners, women, non-whites and non-college educated workers. By contrast, increased transitions to retirement occurred broadly across demographic groups and were not limited to those 70 years and older. Increased retirement was concentrated among both the lowest- and highest-earning older workers.

Two job characteristics were found to be especially important in predicting increased pandemic retirement transitions: employment in high-contact occupations and part-time work schedules. Part-time workers made up an estimated 70% of the increase in net year-to-year employment-to-retirement transitions during the first year of the pandemic.

This finding helps explain why Social Security retirement applications did not rise despite increased labor force exits among adults aged 62-70 and may have implications for the possible persistence of the retirement boom spurred by the pandemic.

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