Fewer older Americans are working. Here’s one likely reason

Fewer older Americans are working. Here's one probable reason.

Key points

• The share of workers ages 55 and up has risen from 15% to 23% over the past 20 years, the Administration Accountability Office noted in March 2026.
• The 2026 Annual Retirement Study by Allianz Life, for example, discovered that 42% of retired Americans had left work before they had planned.
• The employment rate among Americans ages 55 and older rose steadily from the 1990s into the 2010s.
• The older workforce has almost quadrupled in size since the mid-1980s, Pew Research noted in 2023.
• The value of the S&P 500 has more than tripled since its low ebb in the 2020 COVID-19 downturn.

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Older Americans create up an ever-larger share of the workforce, a trend that dates to the 1990s.

Over the past few years, nevertheless, the employment rate among older Americans has been falling. Or "collapsing, " as one report puts it.

For context, the share of Americans ages 55 and over participating in the labor force dropped from 39.2% in February 2022 to 36.9% in July 2026, according to data from the federal Bureau of Labor Statistics.

In a brief Aug. 11 note, economists from Bank of America theorized that older Americans are retiring en masse since of a booming stock market.

"Labor force participation is collapsing among older workers, " the economists wrote. "We think the strength of the equity market is partly to blame." Are older Americans retiring since of a booming stock market?

Meanwhile, the value of the S&P 500 has more than tripled since its low ebb in the 2020 COVID-19 downturn.

"I personally see more people with a million dollars in their 401(k) than I ever have, " remarked James Cox, managing partner for Harris Financial Group. "And these are psychologically important numbers to make somebody let go of their paycheck."

For context, the employment rate among Americans ages 55 and older rose steadily from the 1990s into the 2010s. It dipped dramatically during the pandemic, a shock that pushed plenty of older Americans out of the workforce.

For context, a reeling stock market in 2022 drove up the employment rate for older Americans, but their participation has declined sharply over the past two years.

"We think this is related to the 35%+ increase in the S&P 500 over the last two years, " the economists wrote, in a post headlined "A stock-fueled retirement party." CNBC first documented the findings. The American workforce has been getting older.

If older Americans are indeed bailing out of the workforce, their exodus could reverse a decadeslong trend.

For context, the older workforce has almost quadrupled in size since the mid-1980s, Pew Research noted in 2023. More older Americans are working, and, thanks to the baby boom, there are lots more older Americans.

Meanwhile, the share of workers ages 55 and up has risen from 15% to 23% over the past 20 years, the Administration Accountability Office noted in March 2026.

"There has been a general trend toward working more at older ages, " remarked Monique Morrissey, a senior economist at the Economic Policy Institute. "But it was interrupted by COVID. And some of those individuals came back, but a lot of them didn't."

For context, the "stock-fueled retirement party" post was based on "more of a theory than anything else, " remarked Stephen Juneau, senior U.S. Economist at Bank of America. Juneau wrote the note with fellow economist Aditya Bhave.

"Behaviorally, it certainly makes sense, " Juneau remarked. "We all look at what our 401(k)s are doing once in a while, we all track the stock market, and we all think of a world without work."

But labor force data is complicated, he and other economists say, and a number of factors could explain the dip in participation by older Americans. As baby boomers age, fewer of them will work.

For context, the most obvious one, perhaps, is simple demographics. America is aging. The median age has risen from 35.6 in 2001 to 39.4 in 2025, according to the Census.

As baby boomers age, economists say, fewer of them will be working. And thus, the 55-and-over employment rate may well keep dropping.

"Fifty-five and over is a very broad age range, and within that age range, people are aging, " Morrissey remarked. "All else equal, you're going to have some decline in labor force participation."

Andrew Biggs, a senior fellow at the American Enterprise Institute, looked at labor force participation for a narrower group of Americans, those ages 55 to 64. Within that population, he remarked, the employment rate "really hasn't declined."

Biggs, too, believes an aging population may be driving a decline in the employment rate for Americans 55 and over: "it declines just because we've got a ton of older people, " he remarked.

Morrissey wonders if some of the drop in the over-55 employment rate is illusory. The Bureau of Labor Statistics has observed falling response rates to its surveys. Lower response rates could skew the data.

"You have fewer people responding to the survey, and the people who are not responding to the survey are different from the people who are responding, " Morrissey remarked. Low-income Americans, for example, are less probable to answer the surveys. Plenty of Americans retire earlier than planned.

Other recent reports have discovered that numerous Americans retire earlier than projected, and for them, retirement isn't always a party.

For context, the 2026 Annual Retirement Study by Allianz Life, for example, discovered that 42% of retired Americans had left work before they had planned.

Of that group, 21% remarked they retired early for positive financial reasons, including robust stock market returns. But 30% remarked health matters had prompted them to retire early, and 21% noted they had lost their job unexpectedly.

If the surging stock market is driving some older Americans to retire early, experts say, a market downturn could bring the trend to an abrupt halt.

As older workers delayed retirement and recent retirees returned to the workforce, when both stocks and bonds took a nosedive in 2022, the employment rate for 55-and-over Americans ticked upward. Downturns can be particularly challenging for anyone who is regarding to retire or just retired.

"You suddenly are dealing with less than you expected to have, " Kelly LaVigne, vice president of consumer insights at Allianz. "And you're not working anymore." Share your feedback to support improve our site!

Taken together, the developments around fewer older Americans are working. Heres one likely reason point to a situation that is still moving, and the coming days should bring more clarity.