Has the ailing economy forced older workers to delay their retirement? The conventional wisdom certainly suggests so. A recent front-page story in the Washington Post was headlined: "Ranks of older workers swelling: Data show employment surged among those 55 and over since recession."
The reality, though, is more complicated. The financial crisis caused more workers to want to delay retirement, but the labor market limited their ability to do it. The net effect of these opposing supply and demand forces has, if anything, been to reduce the employment rate among older workers.
By the time the recent recession began, in 2008, Americans were already well into a reversal of the 20th-century trend toward earlier and earlier retirement. The employment rate for older women started rising in the mid-1980s, and for older men soon afterward. The effects were most pronounced among people 65 and older, but were noticeable for those in their early 60s as well. In 1994, 43 percent of people ages 60 to 64 were employed; by 2006, 51 percent were.
Social Security data tell a similar story. The percentage of 62-year-olds claiming early retirement benefits began declining in the mid-1990s, and dropped from about half of those turning 62 in 1994 to less than 40 percent in 2006.