The pandemic pushed millions of older Americans out of the labor force. It should have spawned a surge in Social Security benefits applications — but it hasn’t. Perhaps because they aren’t retired.
The disconnect has economists wondering how many of these baby boomers might come back to the workforce — a key question when job openings have remained near record levels for months now.
Here’s a look at the data and the debate it has spurred:
The retired share of the population is now substantially higher than before Covid-19, according to a Federal Reserve analysis. About 2.6 million older workers retired above ordinary trends since the start of the pandemic two years ago, based on estimates by Miguel Faria e Castro, an economist at the Federal Reserve Bank of St. Louis.
Under the U.S.’s federal retirement program, eligible workers receive a percentage of their pre-retirement income in monthly payments from the government. Workers can start receiving Social Security payments at age 62, with full benefits coming at age 66 or 67 depending on their date of birth.
Despite the surge in baby boomers saying in surveys they retired, applications for Social Security benefits have been fairly flat, based on calculations by the Boston College Center for Retirement Research. Around 0.1% of the U.S. population 55 and older have applied each month, which is consistent with what was happening before the pandemic.
The lack of Social Security filings is a bit of a mystery for Laura Quinby, a senior research economist at the Center for Retirement Research. Older Americans often feel the need to apply for benefits in person, so the closure of the Social Security Administration's local offices during the pandemic might have dissuaded some from applying.
Others might be waiting to reach their late 60s to be eligible for full benefits, Quinby said. Thanks to the Covid-era boom in stock and real estate values, individuals who own assets and have savings can afford to delay applying.
The surge in assets made this an “opportune time for some workers to step out of the labor force and stay out of the labor force,” said Lowell R. Ricketts, data scientist for the Institute for Economic Equity at the St. Louis Fed.
“But we’re still expecting a steady, steady trend that some might want to come back,” he said, especially with the advent of remote and hybrid work, which may lure seniors back to the job market.