Before COVID, more people were working longer and claiming Social Security later to improve their prospects for a secure retirement. New research looks at whether the pandemic affected these patterns.
To provide a benchmark for answering this question, the brief—How Has COVID-19 Affected Older Workers’ Labor Force Participation?—by researchers at the Center for Retirement Research (CRR) uses the Current Population Survey (CPS) to compare patterns of leaving work and of retiring before and after the pandemic for individuals ages 55 and over.
According to the research, the pandemic did indeed result in many job exits among older workers—particularly those with less than a college degree, women, Asian Americans and those in occupations that did not lend themselves to remote work. However, while the pandemic pushed many older adults out of work, it had little impact on retirement and Social Security claiming, suggesting that many might want to return to work if the pandemic continues to recede, the researchers found.
“For individuals ages 55 and over, leaving the workforce is usually combined with the decision to retire, whether voluntarily or involuntarily. But the pandemic was not associated with a large increase in the share of older individuals who report being out of the labor force due to retirement,” write the CRR’s Laura Quinby, Matthew Rutledge and Gal Wettstein.
In fact, they note that the trend is largely flat. The average retirement rate before the pandemic (through March 2020) was 12%, compared to 13% post-pandemic. And while that 1-percentage-point difference is statistically significant, the brief observes that it is qualitatively small.
With one exception—workers age 70 and over—no specific group saw a statistically significant increase in their likelihood of retirement. According to the brief, this oldest group of workers was 5.9 percentage points more likely to leave work and retire during the pandemic.
Consequently, the modest increase in self-reported retirement suggests that Social Security claiming might not have gone up during the pandemic. Most workers over age 70 likely claimed before the pandemic since Social Security’s actuarial adjustment does not reward workers for delayed claiming past 70, the brief explains. In fact, the monthly claiming rate for Social Security retirement benefits remained constant between April 2019 and June 2021.
Leaving Employment
Nevertheless, the researchers did find that the share of workers leaving employment changed sharply with the onset of the pandemic. Before the outbreak, about 15% of older workers would leave employment within a year, but this percentage rose sharply in April 2020 to 31.5%.
In subsequent months, a lower percentage of older people left but the percentage remained near or above 20% during the rest of 2020, the brief further notes. Overall, the share of people ages 55 or older who left the workforce during the pandemic increased by a statistically significant 7.6 percentage points.
Still, the researchers observe that, as suggested by some previous studies, age was not a major predictor. Workers ages 60-64 (as well as 65-69) were not more likely to leave their jobs than workers ages 55-59, after controlling for other characteristics. For instance, pre-COVID, the probability of leaving employment increased with age: 10% left at ages 55-59, but 25% left at ages 70 or older. Post-COVID, most of the age groups saw a consistent 7-percentage-point increase in the share of individuals leaving work.
On the other hand, the effect of COVID was slightly larger for women. In this case, the researchers found that women were two percentage points more likely to leave employment. Most racial groups also saw increases of 7 to 8 points, but the increase among Asian Americans was 13 points.
Meanwhile, college graduates saw only a five-point increase, while those with a high school diploma or less saw a 10-point increase. Not surprisingly, a large difference occurs between those with jobs that do and do not lend themselves to remote work.
In a concluding observation, the CRR researchers note that the discrepancy between leaving work and retiring can be interpreted in two ways: Some older individuals may intend to return to work to the extent that the pandemic continues to recede, and vaccination and other medical advances make doing so safer. “Others may not intend to return to the labor force but are using other sources of income—such as extended unemployment insurance or federal stimulus payments—to postpone claiming Social Security,” Quinby, Rutledge and Wettstein write.
