If you are old enough to collect Social Security or you are entitled to an old-fashioned pension, the likelihood that you will search long and hard for a new job after you lose your old one is low, according to an examination of unemployment statistics from the Center for Retirement Research at Boston College.
The study showed that after nine or fewer months without work, more than 50 percent of workers age 62 or older throw in the job search towel and kick their retirement planning into high gear. "The findings were very surprising to me," says Matthew Rutledge, the research economist who did the study. "The results show that older individuals have little tolerance for a lengthy search. The vast majority either find a job or exit the labor force within a year. Those with financial resources, such as Social Security, leave even sooner."
Rutledge found that people 62 or older are particularly likely to abandon their job hunt and retire if they are not in good health, are women or are married to a spouse who has already retired. The unemployment rate where older workers live doesn't appear to have any significant impact on their decision to choose retirement.
Rutledge says that among workers ages 50 to 61, the picture appears to be different. In that age group, other studies have shown that more than 70 percent continue to job hunt and the ability to claim unemployment insurance keeps this age group even more focused on finding work.
The bottom line: Boomers are retiring and it doesn't take much to convince them to hang up their work boots. "Demographics are going to push us in the direction of overall fewer people working," Rutledge says.
Intuitively, this might sound like good news: Boomers move on and younger people take over. But other research from the center shows that's not true. When older people continue to work, they have more money to spend, and that's good for the overall economy. "More people working means more jobs for everyone," Rutledge says.
To discourage older people from leaving the workforce, Rutledge and the center recommend that the government consider:
- Offering wage subsidies that make hiring older people more attractive for employers and make taking a job more attractive for people who might otherwise choose retirement.
- Extend the earned income tax credit to older non-parents.
- Start government programs that hire older people directly.