What’s Causing More Americans to Retire Now? Explaining the “Great Resignation” Phenomenon

There is a movement happening in the American workforce right now; many are leaving their jobs for a wide variety of reasons, from new opportunities to extended temporary leave to - particularly for the older population - retirement. This phenomenon, dubbed the “Great Resignation,” has been observed and documented and discussed by countless sources, but one of the big lingering questions is why here, why now?

The most natural answer is that this is an appropriate response in the wake of the COVID-19 pandemic. It’s difficult to find anyone or anything that hasn’t been impacted by the pandemic, including the general population’s mentality towards work and the individual American’s beliefs about their safety and health at their own job. Some people are choosing to stay home because they aren’t interested in risking illness to go into the office, but the full picture is a bit more complex — especially for those with jobs where remote work isn’t an option. 

But there’s another factor at play in the Great Resignation. It’s been a long time coming, but due to the timing, its discussion has been downplayed or lost in the swirl of other more major global events.

The Baby Boom Meets the Retirement Boom

The past few years have changed up the established mindset and structure of retirement. Reaching retirement age no longer necessarily means exiting the workforce completely. Many retirees start businesses, shift to part-time work, or change their focus from their jobs to working for charities or nonprofit organizations.

In 2008, the oldest baby boomers reached age 62. This coincided with the so-called “Great Recession,” when the economy declined and, for some, represented a less-than-advantageous time to enter retirement. Many people decided to hold off on retiring and wait a few years.

In 2021, the economy had distanced itself from those events and faced new developments. Just over half of adults aged 55 or older had exited the workforce and retired. For Americans aged 65 to 74, the percentage who had left the workforce was 66.9%, just over two-thirds of this section of the population.¹

Catching Up

With all that said, it may be more helpful to reframe what’s happening now; rather than everyone rushing to the door simultaneously, part of the Great Resignation is more of a catch-up period — a glimpse into what the retirement rates might have looked like if 2008 had gone differently.

The coronavirus pandemic created a mass transition period for the majority of people, and provided many with the opportunity to reevaluate their own positions and create an action plan for reaching the next stage of life, whether that is a new career, leave of absence, or full retirement.

The pandemic has continued longer than any of us could have imagined, and even in areas that have seen a significant decline in cases, many are still discovering the new patterns of daily life and work in a post-pandemic world. In that context, it’s easy to see why someone reaching the end of a long and rewarding career might choose to exit the workforce in the midst of the shake-up of COVID-19 and parachute into a less stressful, more enjoyable lifestyle.

Is It Your Time, Too?

As many Americans your age and older are participating in this mass retirement, you may be wondering if this is your opportunity to take the plunge and ease into retirement. Despite the large numbers of people making this big transition, it is important to remember that moving with the crowd isn’t always a justified action.

It’s also possible that now is a great time to transition into a different opportunity for your last few years of work. Maybe you have a business idea you’ve been working on — now is a great time to put it into action. Or perhaps you want to transition into a new role at work or with a different firm that will be less demanding when you finally transition into retirement. This is also a great idea.

This is your chance to follow your dreams of retirement or further business, and as always, the first step is to take the time to talk with a financial professional. They can help provide a look at your overall financial situation and strategize for changing directions in your career or analyze the pros and cons of retirement at this point in your life.

Whether you end up as a part of the Great Resignation or not, it is always a good idea to discuss your readiness for retirement with a financial professional and decide with their assistance when the time is right for you.