A potential retirement savings crisis is looming in the United States as the population ages, with 21% of the population projected to be aged 65 or older by the end of the decade. However, despite concerns about the adequacy of retirement savings, only 36% of non-retired adults believe their savings are on track. New research from economists at the Federal Reserve Bank of New York found that this retirement savings deficit has not affected Americans’ plans to exit or partially exit the workforce. Surprisingly, workers have reported lower expectations of working full-time beyond ages 62 and 67 since the pandemic, particularly among lower-income and female workers.
The pandemic ushered in the “great resignation” as almost 50 million people quit their jobs in the two years following the worst of Covid-19. Despite the end of the pandemic and a quick economic recovery, the labor force continues to experience significant changes, according to New York Fed economists. Retirement-age full-time employment expectations have plunged since March 2020 and remained low, with just 45.8% of respondents planning to work full-time beyond age 62 in March 2024, down from an average of 54.6% before the pandemic. The decline is seen across different age, education, and income groups, indicating a broad-based shift in retirement expectations.
While the great resignation has ended and wage growth is easing, the decline in expectations of working full-time beyond ages 62 and 67 persists, according to New York Fed economists. The reasons for this phenomenon are unclear, but it could be related to post-pandemic cultural shifts and increased savings during the pandemic. This shift in retirement expectations may have significant macroeconomic implications on consumption and saving decisions and timing of Social Security benefit claims. Lawmakers have been unable to find a solution to address the impending depletion of the Social Security trust fund by the mid-2030s.
Despite a resilient economy, a healthy job market, and ongoing consumer spending, more Americans are becoming financially overextended, particularly on their credit cards. New data released by the Federal Reserve Bank of New York showed that delinquencies on credit card balances increased in the first quarter of 2024, reaching the highest level since 2012. The percentage of credit card balances in serious delinquency (90 days or more late) rose to its highest level since 2012, indicating worsening financial distress among some households.
Retail giant Walmart announced the elimination of several hundred corporate jobs and the relocation of most remote office staff to its Bentonville, Arkansas headquarters. The move aims to facilitate better collaboration, innovation, and a faster pace of work, according to Walmart’s chief people officer Donna Morris. The relocation will impact workers in Dallas, Atlanta, and Toronto offices, with most employees moving to the Bentonville headquarters. Walmart’s latest round of layoffs comes as the company prepares to report its quarterly earnings and follows the recent decision to exit its virtual healthcare services and close all 51 healthcare centers in six states.
In conclusion, the United States is facing challenges related to retirement savings, changing labor force expectations, and increasing financial overextension among households. The impact of the pandemic on retirement decisions and labor market dynamics continues to be felt, with implications for the economy and Social Security benefits. Retail companies like Walmart are also undergoing significant changes, including job cuts and relocations, as they adapt to evolving work environments. These trends highlight the ongoing shifts in the American economy and the need for effective policies to address issues such as retirement security and financial stability.
