More Americans Are Retiring Earlier Right Now - And There Are Good Reasons Why

Strong stock market performance has led to more retirees.
Updated July 18, 2024
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senior woman planning retirement

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In recent years, there has been a noticeable surge in the rate of retirement among Americans, defying economists' expectations. This phenomenon termed the "Great Retirement Boom" has been accelerated by various factors, including the remarkable performance of the stock market and the evolving dynamics of the workforce.

But what is playing into this trend and how does it relate to your retirement choices?

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Stock market gains

FellowNeko/Adobe stock market graphs on smartphone screen

One significant catalyst for the accelerated retirement trend is the remarkable gains witnessed in the stock market. Following the tumultuous period induced by the COVID-19 pandemic, the stock market rebounded vigorously, with indices like the S&P; 500 reaching record highs.

For individuals nearing retirement age, capitalizing on these market gains presents an attractive opportunity to secure their financial future. The pandemic caused retirement numbers to soar beyond what most expected, but they have once again recently climbed as a result of strong stock market performance.

The United States now has around 2.7 million more retirees than predicted by economist forecasts. The allure of retiring during a bull market, where investment portfolios are flourishing, can serve as a compelling incentive to bid farewell to the workforce earlier than planned.

Many of these portfolios are held by baby boomers, the majority of whom spent years diligently contributing to investment and retirement accounts. After years of compounded investing and interest, it made sense for many of them to capture as much profit as possible during market upswings to retire.

Return to office mandates

NDABCREATIVITY/Adobe proud business woman standing in lobby

The resurgence of return-to-office (RTO) mandates in the wake of the pandemic has also played a pivotal role in prompting individuals to hasten their retirement plans. 

The transition to remote work during the pandemic offered a glimpse of newfound flexibility and work-life balance for many employees. However, as companies pivot back to in-person work arrangements, some individuals may find themselves grappling with the prospect of returning to a rigid office environment.

For those approaching retirement age, the imposition of RTO mandates may serve as a tipping point, prompting them to accelerate their retirement timeline in pursuit of greater autonomy and lifestyle preferences.

How to know when the time's right

Andrey Popov/Adobe retirement plan on book

Navigating the decision of when to retire can be daunting and fraught with financial, emotional, and logistical considerations. Here are some key tips to help individuals assess whether the time is right for retirement.

  • Financial preparedness: Evaluate your financial readiness for retirement by assessing your savings, investments, and projected expenses. Consider consulting with a financial advisor to develop a comprehensive retirement plan tailored to your needs and goals.
  • Lifestyle considerations: Reflect on your desired lifestyle in retirement, including factors such as travel, leisure activities, and healthcare needs. Assess whether your current financial resources align with your envisioned retirement lifestyle.
  • Health and well-being: Take stock of your physical and mental health status and consider how retirement may impact your well-being. Factor in considerations such as access to healthcare, social connections, and opportunities for personal fulfillment in retirement.
  • Social Security and benefits: Familiarize yourself with Social Security benefits and other retirement benefits available to you. Understand the eligibility criteria, claiming options, and potential impacts on your overall retirement income.

An important takeaway

Kirsten Davis/ senior couple sitting at home using smartphone and laptop to plan retirement

A crucial lesson in watching older generations take advantage of stock market runs is the power of long-term, steady investing. Trendy, of-the-moment investing has become quite popular in recent years, but current retirees were able to take advantage of stock market gains and build wealth because they denounced such fads and stayed the more boring, steady course.

Baby boomers will leave an investing legacy that younger generations should view as an example, one that is rooted in incremental, long-term investing that does not react to emotional impulses. Millennials and their younger counterparts can create similar futures for themselves by investing every month, from as young as they can, in small amounts to their 401(k)s and IRAs.

As they grow older and make more money, it’s important to start investing more and stay invested in time-calibrated funds geared for retirement. The most important lesson of all, one perhaps most illustrated by recent retirees, is time in the market is more important than timing the market.

That is unless you have already been invested for 30 or more years, are ready to retire, and the stock market is on a historic run — then you can take advantage of the timing, get out, and enjoy the fruits of your labor.

Bottom line

Jadon B/ retirement with a father and son

Stock market gains and return-to-office mandates have emerged as key drivers influencing individuals to plan for retirement. As people contemplate retirement, it is essential to conduct a thorough assessment of financial readiness, lifestyle preferences, and overall well-being. 

By carefully considering these factors, retirees can make informed decisions about when the time is right to embark on the next chapter of their lives in retirement.

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Author Details

Georgina Tzanetos Georgina Tzanetos is a former financial advisor who has been active in financial media for the past six years. She holds a master's in political economy from NYU, where she studied distressed labor markets.