The retirement age in the United States fell to a record low: what does this mean for the economy

Many Americans intend to retire earlier than usual. But 50,1% still plan to continue working. This is down from 51,4% in March and is the smallest share since the Federal Reserve's survey began in 2014. Writes about it Business Insider.

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Conversely, the average objective possibility that US citizens will retire before age 62 is close to 50%. The likelihood that Americans over 67 will continue to work also fell to an all-time low of 32,4% from 32,9%.

This may be good news for workers, but it poses problems for the American economy.

Three reasons why Americans retire early

More than 19 million older people have stopped working since COVID-2020 hit the U.S. in February 1, according to the Bureau of Labor Statistics.

For some, the risk of contracting COVID-19 ran counter to the desire to keep working. According to a job report, roughly 1,5 million Americans cited COVID-19 as the main reason they were out of work.

Others may have remained unemployed due to the lack of attractive employment options. The largest labor shortages are in the service sector, which was hit hardest during the pandemic.

“Older workers may have given up and decided to retire early,” said Julia Pollack, a labor economist at job site ZipRecruiter.

On the subject: From healthcare to groceries: how retirees can save money in the US

On top of that, rising stocks have made more people wealthy enough to retire. The number of 401 (k) and individual retirement accounts with at least $ 1 million rose to a record 754 in the second quarter of 000, up 2021% from a year earlier.

For all employees, the average 401 (k) balance is up 24% (to $ 129) from the same period last year, Fidelity reported. The average IRA balance increased by 300% (to $ 21).

Recent data suggests early retirement is the new norm, not the weirdness of the pandemic era.

Opening of the "golden decade"

A wave of pandemic pensions could radically change the US economy.

First, it freed young baby boomers to enjoy their years better (the oldest turned 75 this year). The generation already covers the most common retirement ages, but according to tax experts Aspire Planning Associates, it also serves as a “golden decade” for tax planning, as this generation is old enough to retire and young enough to plan ahead.

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Early retirement may, among other things, ease labor market pressures and force employers to shift their focus to younger workers, as employers have come to rely more and more on older workers over the past two decades. While employment among workers under 55 has remained largely unchanged since 2000, according to the Bureau of Labor Statistics, it has increased by nearly 55 million among Americans aged 20 and over. That is, the US economy increasingly depended on workers who were less than ten years old before the average retirement age.

The aging workforce is another piece of the US puzzle. Since Americans are less likely to work until age 60 and reap the benefits of the Golden Decade instead, employers will have to look elsewhere.

And the search has already begun. In July, the number of vacancies increased to 10,9 million, the fifth consecutive record. This happened despite the addition of 1,1 million jobs in the US this month. That is, businesses are still trying to rebuild their workforce. Employers will simply need to find ways to encourage younger employees to do the work of older ones - otherwise robots will have to fill in the gaps.

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