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A retirement savings crisis may be looming in the United States but it doesn't appear to be forcing people to consider working full-time into their old age.
By the end of the decade, about 21% of the population will be 65 or older, up from 15% in 2016, according to forecasts by the Census Bureau. Most non-retired adults have some type of retirement savings, but only 36% think their savings are on track.
New research from economists at the Federal Reserve Bank of New York finds that this retirement savings deficit hasn't made a dent in when Americans plan to exit, or partially exit, the workforce.
In fact, researchers found that since the pandemic, workers have reported much lower expectations of working full-time beyond ages 62 and 67 (the latter is the retirement age for full Social Security benefits). Surprisingly, they found that the decline is particularly notable for lower-income and female workers.
What's happening: The pandemic ushered in the great resignation. Almost 50 million people quit their job in the two years following the worst of Covid-19, citing pressures such as burnout, general job dissatisfaction or child care or elder care needs. Amid a tight labor market, many were also able to find a better job, with better pay.
The trend was so prevalent that Beyoncé even released a song about it.
But even though the pandemic is over, and the US economy has recovered quickly from the 2020 recession, the labor force is still experiencing unprecedented changes, report New York Fed economists Felix Aidala, Gizem Kosar and Wilbert van der Klaauw.
Looking at the Survey of Consumer Expectations' (SCE) triannual Labor Market Survey, the economists found that beginning in March 2020, retirement-age full-time employment expectations began to plunge and have persistently declined since. The survey hit an all-time low in March 2024, when just 45.8% of respondents said that they planned to work full-time beyond the age of 62. Those expectations averaged 54.6% in the six years before the pandemic.
"The decline is broad-based across age, education, and income groups, with workers under age 45, without a college degree, and with annual household incomes below $60,000 showing slightly larger declines than their peers," wrote the researchers.
What it means: While the great resignation has ended and wage growth is easing, the New York Fed's survey responses still "reveal a persistent decline in expectations of working full-time beyond ages 62 and 67," said the economists.
They're not sure what's behind the phenomenon and they said they were surprised by the results given increases in life expectancy.
There could be a litany of explanations, many due to post-pandemic cultural shifts about the value of work and an increase in savings during the pandemic. Either way, it could be significant for the economy.
"The pandemic-induced change in retirement expectations may continue to affect the labor market in years to come," they wrote. "It also can have important macroeconomic implications when consumers act on their expectations in making consumption and saving decisions."
It could also have serious implications for the timing of claims for Social Security benefits.
Social Security payments still provide about 90% of income for 12% of older men and 15% of older women, according to Social Security Agency surveys.
But without intervention, the Social Security trust fund will be depleted by the mid-2030s, meaning that only a portion of retirees' expected benefits will be paid out. Lawmakers have faced a decades-long political stalemate on how to fix it.
Yes, but: This is a survey of expectations, researchers at the New York Fed are quick to point out. Just because Americans say they plan to shift to part-time work or retire early, it doesn't mean that they'll be able to.
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