Federal Reserve Bank of St. Louis, Miguel Faria e Castro, 2021-10-15 – “The labor force participation rateregistered its largest drop on record in 2020, falling from 63.2 percent in the fourth quarter of 2019 to 60.8 percent in the second quarter of 2020. By the second quarter of 2021, the rate had recovered slightly, to 61.6 percent, but was still 1.6 percentage points below its pre-pandemic level—indicating that as of that quarter, roughly 5.25 million people had left the labor force. People left the labor force during 2020 for many reasons. Some may have left due to cyclical factors: Labor force participation tends to fall when the unemployment rate is high, and in 2020 the COVID-19 crisis featured the highest post-Great Depression unemployment rate on record (14.8 percent in April 2020). Others may have left for factors specific to the COVID-19 crisis. For example, many people were forced to quit jobs to care for children or other family members because of the lockdown of schools and other institutions. Some people would have left the labor force anyway because of retirement. Retirees are a significant fraction of the population, as U.S. population growth has slowed and Baby Boomers (those born between 1946 through 1964) are currently retiring. Finally, a significant number of people who had not planned to retire in 2020 may have retired anyway because of the dangers to their health or due to rising asset values that made retirement feasible. This essay provides a back-of-the-envelope estimate of the number of “COVID-19 retirements.”…
The COVID Retirement Boom
Federal Reserve Bank of St. Louis, 2021-10-15
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