Content in Retirement

Coming out of retirement is a difficult decision. Some comebacks, like those of Stephen King and Michael Jordan, were a success. Others, like Muhammad Ali and Charles de Gaulle, found the going much tougher the second time around.

In the present day, economists are hoping that more people will come out of retirement. Labor markets remain very tight, and the premature departure of more experienced workers is one of the main reasons why. Unfortunately, it is appearing increasingly unlikely that seniors will return to work, leaving a big gap between demand and supply in the job market.

As we detailed in our 2021 essay “Coming Out of Retirement,” somewhere around 1.5 million Americans retired earlier than expected during the first year of the pandemic. Many of them still had plenty of productive years left, and many left the workforce without substantial amounts of saving. This led us to anticipate that waves would be returning to the labor market when public health risks abated.

We’ve seen a trickle, but not a flood. While labor force participation rates for most age cohorts have gradually returned to pre-pandemic levels, the majority of workers over the age of 65 who left the labor force in 2020 and 2021 have stayed away.

A study by the Federal Reserve found that the retired share of the U.S. population is still 1.5% above what the country’s demographic profile would suggest. This accounts for almost all of the remaining deficit in American labor force participation relative to the pre-pandemic position.