{"id":10883,"date":"2026-08-31T19:41:27","date_gmt":"2026-08-31T23:41:27","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=10883"},"modified":"2026-08-31T19:41:27","modified_gmt":"2026-08-31T23:41:27","slug":"older-americans-are-stepping-out-of-the-workforce-they-can-thank-the-roaring-stock-market","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=10883","title":{"rendered":"Older Americans are stepping out of the workforce. They can thank the roaring stock market."},"content":{"rendered":"
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Droves of older workers are leaving the workforce, and a new Bank of America Securities report says wealth generated from a surging stock market could be an underlying factor.<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n
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The labor force participation rate among workers 55 and older never recovered after the pandemic shock and has dropped further since then. In February 2020, right before the pandemic was officially declared, the US labor force participation rate for workers ages 55 and older was 40.3%. In July 2026, it had dropped to 36.9%.<\/div>\n<\/div>\n<\/div>\n<\/div>\n

“We think this is related to the more than 35% increase in the S&P 500 over the last two years,” Aditya Bhave, a US economist at Bank of America Securities, told Yahoo Finance.<\/p>\n

That surge has likely made retirement an easier choice for many folks debating when to hit the exit ramp.<\/p>\n

“There’s been this puzzle in the labor data,” Bhave said. “If you look broadly across the US economy, most indicators recovered really nicely after the pandemic \u2014 a lot faster than what we were expecting. One of the laggards was labor force participation amongst older workers. Over the last several months, it’s taken another leg down.”<\/p>\n

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A Bank of America study compares labor force participation among older workers and recent gains in the S&P 500.\u00a0\u00b7<\/span>\u00a0Bank of America Global Research<\/figcaption><\/figure>\n

Bhave was careful not to pin it all on the market.<\/p>\n

“I don’t think any one causal factor can fully explain it,” he said. “But it’s quite likely that given what equities have done obviously over the last couple years, but also cumulatively since 2020 \u2014 when the S&P 500 has more than doubled \u2014 that kind of increase in wealth is going to incentivize some people to retire because they’ll feel like, ‘Okay, I don’t have to work.'”<\/p>\n

“It gives people a good amount of confidence that they can retire,” Bhave added. “There’s a lot of cushion, even for folks that are somewhat risk-averse.”<\/p>\n

What happens to their fortunes if markets turn?<\/p>\n

“In this instance, there’s enough of a cushion, at least in my view, that folks can say, ‘There could be a drawdown in equities, but as long as it’s not completely disastrous, I’ve seen huge accumulation in my wealth, and I’m still going to feel very comfortable retiring even if there is a drawdown,'” Bhave said.<\/p>\n

Financial advisers who work with clients nearing retirement weren’t surprised by this analysis.<\/p>\n

“The wealth effect is real,” said Cary Carbonaro, a certified financial planner and\u00a0author<\/a> of “Women and Wealth.” “We are coming off double-digit market gains from 2023, ’24, and ’25 and on pace for 2026. Retirement is happening because of these gains. It is giving my clients more options than they had before.”<\/p>\n<\/div>\n

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Tyson Sprick, a financial planner in Overland Park, Kan., has had similar experiences with his clients. “The numbers on the screen have never looked better, and some clients are getting the confidence to finally pull the trigger on retirement,” he said.<\/p>\n

“I’m also hearing ‘How long can this go on for?’ and ‘Will I still be OK if we see a big drop?” he added. “So we take all of that into account with forward-looking plan assumptions on where the market is currently, and while we can’t predict the future, we’re not blind to the fact that these robust returns shouldn’t be counted on forever.”<\/p>\n

Even those not ready to retire are riding the high. Bank of America also released\u00a0new data<\/a> showing the average 401(k) balance reached $124,250 in Q2 2026 \u2014 up 15% from a year ago. Roughly two-thirds of employees feel confident their savings are on track to allow them to retire at the age and lifestyle they want, according to the data, a six-point gain from last year.<\/p>\n

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