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Stock gains are fueling retirements among older workers: Economists
CNBC • • business
Key Points:
- Workers aged 55 and older are retiring at an accelerated rate, driven partly by a "wealth effect" from soaring stock market gains linked to AI optimism, according to Bank of America economists.
- Since August 2024, labor force participation among older workers has declined notably, coinciding with strong S&P 500 returns in recent years, which have significantly boosted household net worth.
- The retirement surge is also influenced by demographic factors, including the large baby boomer cohort reaching retirement age and early retirement incentives from employers.
- Economists warn that a potential stock market downturn could prompt some recent retirees to return to work, impacting labor market dynamics and possibly increasing unemployment.
- While a market correction poses risks for retirees relying on stock portfolios for income, proper financial planning can mitigate these risks; however, a slowdown in retirements could reduce job market fluidity and challenge job seekers.
