How the Great Recession Really Affected Early Retirement

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One of the worrying trends in the labor market in recent years has been a decline in the percentage of Americans working or actively looking for work. There have always been a large portion of the working-age population considered to be not in the workforce. These may include stay-at-home parents, full-time college students, or retired persons. But the relative number of these folks has been increasing for about a decade, as the more of the workforce enters retirement age. That trend accelerated during the recession, likely due to a weak economy encouraging more people to stop looking for work altogether.

But according to a new paper released today from Gary Burtless and Barry P. Bosworth of Brookings Institution, we shouldn’t blame older workers for this trend. In fact, across the vast majority of wealthy nations, the Great Recession actually encouraged a higher percentage of retirement-age workers to hold on to their jobs past typical retirement age. According to the paper, the Great Recession actually exacerbated a trend of later retirement which has been ongoing since the 1980s across the wealthy world.

It is still the case, however, that older folks tend to work at a lower rate than those in the prime of their life. It’s just that the disparity in participation rate between prime-working age people and those in retirement-eligible years has decreased.

This should be seen as a good thing. After a severe recession brought on by overly-indebted private sector, and a recovery marked by growing public sector debt, what we need more of is people working and earning money.  It can also be seen as evidence against the argument that welfare benefits are holding back the labor market. After all, people of retirement age are eligible for benefits like Social Security here in the U.S., but they’re increasingly choosing work instead.

3 comments
dellflorida
dellflorida

To Chris Matthews- Stop calling one of the very worst economic crashes in U.S. histoy a Recession!

A recession is a general slowdown in economic activity. Do you know how stupid it is top call the Great Crash of 2007(first bailour of which took place in the Bush administration)- a RECESSION!

Of course, youare just following orders- your editor would never allow you to called the big economic crash a big economic crash- people right in congress now,partly responsible for the Crash would be offended....

dellflorida
dellflorida

There was no 'Great Recession'.....it is  a white wash of the actual event.....there was the biggest financial Crash(money wise) in U.S. history.    It was the GREAT CRASH of 2007;(the first financialbail out of the CRash was at the end of  Bush's presidency).

We had the Great Crash of 1929 and then we had the Great Crash of 2007......

 But apparently all media writers have agreed to call one of the very  greatest financial diaasters in U.S. history a 'Recession'.....

carlyt
carlyt

Just a note to the writer Social Security is not a welfare benefit. and those really interested in retirement, retirement planning and other retirement related issues should use the web. Much of the information is free. Just check out sites like Retirement And Good Living one of many sites that offers information on finances, retirement plans, health, retirement locations, volunteering and much more.