What Did 2007-2010 Look Like For U.S. Workers > or = 55?

It’s no secret that the recent recession has been brutal on older workers.

And even though this demographic is not my client base (my client base = GenX and GenY), I know that the success of the 55 and older crowd (the Baby Boomers) to self support in their retirement years will affect GenX/GenY’s  ability to retire.


I’ll get into that in a minute.

First let’s look at some of the recent data around the Baby Boomers’ labour market dropout rate.

Boston College’s Center for Retirement Research is one of my favourite sites for retirement trending and data.

A recent paper caught my eye:  ‘Economic Consequences of The Great Recession‘. I knew it would have great info on this recession’s intersection with retirees and soon-to-be-retirees.

Well, it does. Though it is sobering and alarming. At a meta level there have been abundant stories about which labour markets have been most affected by the recession.

Construction. Manufacturing. Men. Older workers.

So what’s been going on? Not only men but women 55 and older have been exiting the workforce for reasons beyond disability or retirement (both of which are alarming reasons to leave at such a young age, with retirement being a good reason only if you have been a Rock Star saver and have an incredible Balance Sheet to now go live off).

There’s been a huge jump in the rate of labour force exit by both genders in this age category.  What’s been causing it has been more linked to the recession than to other factors, such as an ability to retire successfully, especially once housing values is factored into the equation.

Let’s revisit some of the recession data:

1) The 2007-09 recession was the most severe economic downturn of the post-World War II era.

2) The nation’s output (GDP) fell 8% below trend between the fourth quarter of 2007 and mid-2009.

3) The unemployment rate doubled to over 9 %.

4) Households lost 1/4 of their wealth between mid 2007 to early 2009.

5) 1/3 of those losses were in home equity.

Many of them experienced a ‘Discouraged Worker Effect’:  They no longer have a choice but to exit the labour market; their skills may no longer be needed and they face limited options for re-employment.

Of course there are exceptions, as there are with any data points.

Yet it’s alarming to encounter the fact that for workers 55 and older, their labour participation has peaked and is starting to decrease for both genders.

It’s alarming because as a country we are already trying to figure out how to meet the social commitments promised of SSA and Medicare. With more Baby Boomers choosing to retire early and start SSA early, it’s a harbinger for a crisis coming our way once they run out of money in their retirement funds beyond SSA.

Aggregate that with the vulnerability of being an older worker facing ageism (my anecdotal input), and it doesn’t take long to see the magnifying effect of the unsustainablility of Baby Boomers to successfully support themselves through retirement.

They are quitting work earlier, with weaker balance sheets, and are living longer than prior generations.  Some of them will live for decades in retirement.

How will we support these discouraged workers?

It may be beyond existing SSA and Medicare, since many of them are taking early Social Security (@ age 62) instead of waiting until Full Retirement Age, let alone 70.

I don’t have any solutions here, but am definitely concerned at what this means for the Baby Boomer generation and their kids…with their kids being my clients.

(Data points 1-5 sourced from ‘Economic Consequences of the Great Recession‘)