A retirement crisis is looming in the United States as the population aged 65 or older is expected to increase significantly by the end of the decade. Despite this, only 36% of non-retired adults feel their retirement savings are on track. New research from economists at the Federal Reserve Bank of New York shows that this savings deficit has not impacted when Americans plan to exit the workforce. Since the pandemic, workers have reported lower expectations of working full-time beyond ages 62 and 67, particularly notable for lower-income and female workers.
The pandemic ushered in the “great resignation” with almost 50 million people quitting their jobs, citing burnout, dissatisfaction, or personal needs. However, even as the economy recovered from the pandemic, the labor force continues to experience unprecedented changes. New York Fed economists found that retirement-age full-time employment expectations began to decline in March 2020 and have continued to do so. The decline is seen across age, education, and income groups, with larger declines for younger workers, those without a college degree, and lower-income households.
The persistent decline in expectations of working full-time beyond ages 62 and 67 despite the end of the great resignation and easing wage growth is surprising. Researchers are unsure of the underlying reasons for this phenomenon, which could have significant macroeconomic implications. The impact of post-pandemic cultural shifts about the value of work and increased savings during the pandemic could be contributing factors. The pandemic-induced change in retirement expectations may continue to affect the labor market and consumer decisions around consumption and savings.
Despite the decline in full-time employment expectations, there are concerns about the impending depletion of the Social Security trust fund by the mid-2030s without intervention. Social Security payments currently provide a significant portion of income for many retirees, but lawmakers have long struggled with finding a solution to the impending shortfall. The survey results from the New York Fed caution that expectations do not guarantee actual outcomes, and Americans may face challenges in shifting to part-time work or retiring early.
The Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit reveals that more Americans are becoming financially overextended, with credit card delinquencies reaching the highest levels since 2012. Households are facing worsening financial distress, with increasing percentages of delinquent payments across all debt types during the first quarter of 2024. This data highlights the growing challenges faced by American consumers, despite a resilient economy and a healthy job market.
In other news, Walmart announced the elimination of several hundred corporate jobs and the relocation of most remote office staff to its headquarters in Bentonville, Arkansas. The move aims to facilitate better collaboration, innovation, and faster decision-making, as well as strengthen the company’s culture and support employee development. The impact of these changes will be felt in offices in Dallas, Atlanta, Toronto, and other locations, with some workers being relocated to different areas. The announcement comes as Walmart prepares to report its latest quarterly earnings and follows the recent decision to exit its virtual healthcare services.
