During the years following the financial crisis Baby Boomers held on to their jobs. Either loath to abandon their good pay or to draw from their beaten down savings, they delayed retirement. Now, perhaps emboldened by the stock market hitting new highs, Boomers are more inclined to head for the exits. Bloomberg reports that 800,000 Boomers opted to retire in the fourth quarter of 2016.
For more than five years, the six-month trend for this figure — a significant demographic source of downward pressure on the headline labor force participation rate — had been heading higher, before plateauing for most of 2016. The labor force participation rate for this cohort tanked by a full percentage point, to 23.6 percent, in the final quarter of the year.
Data on flows in and out of the labor force back up this story, with the six-month trend in Americans moving from employment to outside the workforce (a loose proxy for retirements) notably accelerating since October.
You can see on my chart below that the labor force participation rate has been stabilized recently near levels not seen since the Mid-1970s. With an acceleration in Boomer retirements, the rate could fall further once again.
Read more from Bloomberg here.
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