Baby Boomers Are Retiring In Droves … Here’s What That Means For The Economy

While plenty of people work well into their late 60s and beyond, the age of 65 has long been associated with retirement. A record number of Americans (more than 4 million) are reaching that milestone in 2024 and in each of the next three years.

The ramifications of this expected retirement tsunami will be felt far and wide, with employers forced to pay higher wages to fill open positions and consumer prices likely rising to keep pace with the elevated income.

Hardest hit sectors

Some industries have an older workforce on average than others, and they will likely be impacted most directly when retirement numbers begin to surge.

According to the Department of Labor, more than one-fourth of the workers in several industries are currently 55 years old or older, including:

• Wholesale trade
• Financial activities
• Public administration
• Manufacturing

There’s also a category labeled “other services” that includes jobs from equipment maintenance to funeral services and has a combined 27% share of workers over the age of 55.

Consumer spending

Another important factor likely to be influenced by a wave of retirement involves the amount of money being injected into the economy. Economists note that, as a general rule, retirees spend less money than they did during their working years — in large part because their income level decreases substantially.

That isn’t necessarily great for the GDP, but the reduced demand could help keep consumer prices in check even if wages do increase.

The bottom line

Between 2010 and 2019, the average number of annual retirements was somewhere just north of 1 million. This year could see double that amount.

With nearly 3 retirees for every unemployed entrant into the workforce in May, it’s clear that this is an issue that will have a ripple effect for a long time to come.

Chris Agee July 25th, 2024

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