The post-WWII baby boom in the US peaked in 1960, when 4,257,850 live births took place. Those who were born in that year will reach the standard retirement age of 65 in about six years (2025).
With this impending milestone set to tax the resources of the Social Security Administration at a level not yet experienced in the system’s 84-year-existence, researchers at the St. Louis Fed shared a few calculations that not only showed how many people can be expected to file for retirement benefits in the years between now and 2025, but also how economists should take this information into account when evaluating the performance of the labor market.
Guillaume Vandenbroucke, the research officer and economist who published the information on the St. Louis Fed’s “On The Economy Blog,” demonstrated how official BLS data tend to understate the performance of the labor market when the number of people retiring is high, because the ‘net’ employment figure subtracts the number of people retiring.
To estimate the number of future retirees, Vandenbroucke started with the population of workers between the ages of 40 and 65 in 2018 using data gathered by IPUMS-USA. He then adjusted for age- and gender-specific mortality rates from the Human Mortality Database.
Basing his calculations on the assumption that the age-specific mortality rates would remain constant over the years, Vandenbroucke calculated the number of people who would reach the age of 65 each year. He then took his calculations one step further, and calculated the number of people reaching the age of 65 each day and each month.
He displayed his calculations in the table below.
What he determined is that the daily rate of people aging into retirement (i.e. turning 65) will peak in 2022 at just below 12,000. Over the next two decades, about 10,000 people will turn 65 every day.
On the right axis, Vandenbroucke breaks down retirement figures by month, which will make them easier to compare with BLS jobs data. That number will peak at just shy of 350,000 in 2022.
Looking ahead several decades, Vandenbroucke will probably need to adjust his model, since millennials, who will reach ‘retirement age’ in 2060, or thereabouts, likely won’t be ready to retire until much, much later – if ever.