Data and Research December 7, 2021

The Pandemic’s Impact on the Decision to Retire

Although more workers left the workforce, the pandemic was not associated with a large increase in the share of older workers who report being out of the workforce due to retirement.

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A recent Center for Retirement Research (CRR) at Boston College study examined how the pandemic has impacted a workforce demographics pattern seen before COVID-19—namely, people seeking to work longer and claim Social Security later to improve their prospects for a secure retirement.

In its “How Has COVID-19 Affected Older Workers’ Labor Force Participation?” study, the CRR finds that the rate of workers leaving the workforce has changed since the start of the pandemic. Before the outbreak, about 15% of older workers—those ages 55 and over—would leave the workforce in a given year. That percentage rose sharply as of April 2020, reaching 31.5%.

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In the following months, a lower percentage of older workers left their jobs, but the percentage remained near or above 20% during the rest of 2020. Overall, the share of those 55 or older who left the workforce during the pandemic increased by 7.6 percentage points.

Before the start of the pandemic, the study says, the probability of leaving of leaving employment increased with age, such that 10% left between the ages 55 and 59 and 25% left at ages 70 or older. After the onset of the pandemic, most of the age groups saw a substantial percentage point increase in the share of individuals leaving the workforce.

The CRR study finds that the effects of the pandemic varied across gender and racial groups. Women saw an 8 percentage point increase in those leaving work, compared with a 7 percentage point increase for men. Most racial groups saw an increase of seven to eight points, but the increase among Asian Americans was 13 percentage points.

For those ages 55 and older, leaving the workforce is usually (but not always) coupled with the active decision to retire, the study says. But the pandemic was not associated with a large increase in the share of older workers who report being out of the workforce due to retirement. Rather, that percentage remained largely flat. The average retirement rate before the pandemic was 12%, and it increased to 13% post-pandemic. There was one exception, as those ages 70 and older were 5.9 percentage points more likely to leave work via retirement during the pandemic. Since this group was likely already receiving Social Security, benefit claiming did not increase as much.

On one hand, employment exits among workers over age 55 dramatically increased during the pandemic, especially for those with less than a college degree and those whose occupations were less likely to allow to remote work, the study shows. On the other hand, self-identified retirement increased only slightly over the past year and was concentrated among those over age 70. Meanwhile, the study said the pandemic had little impact on Social Security claiming.

The study says the discrepancy between the numbers leaving work and retiring can be interpreted in two ways. Some older individuals may intend to return to work to the extent that the pandemic continues to recede, and vaccination and other medical advances make doing so safer, or they may not intend to return to the labor force but are using other sources of income—such as extended unemployment insurance or federal stimulus payments—to postpone claiming Social Security.

Products December 7, 2021

Aon Tool Quantifies Impact of Social Determinants of Health

It recommends solutions for improving the health of employees who live in disadvantaged communities.

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Aon has unveiled an interactive model that quantifies the impact of the social determinants of health on employer workforces.

The Health Disparity Assessment is designed to help employers identify employees at risk, measure health disparity within their workforces and recommend solutions to improve the health of employees who live in disadvantaged communities. The tool uses de-identified demographic and location data on employee populations and dependents covered by the employer’s health plan, combined with an index that rates potential health disparities driven by social determinants, including local income, education, employment and housing factors.

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The membership and area disparity profiles are combined with machine-learning algorithms that estimate the prevalence of common chronic conditions such as diabetes or cardiovascular and musculoskeletal disorders. The tool quantifies the impact of social determinants on service utilization such as emergency room visits, pharmacy scripts, preventive care and mental health care. Employers can compare their member impact distributions against broad employer market data based on Aon’s Health Value Initiative, a database of employer health care cost, plan design and demographic data.

“Living in a disadvantaged area has been linked to higher rates of chronic disease such as diabetes, hypertension and asthma, and our data suggest employees in those areas often underutilize high-value services such as preventative care, mental health care and vaccinations,” says Todor Penev, senior vice president of health analytics for Aon. “We are helping employers rapidly map the health risks their employees face based on demographics and recommending high-impact prevention, risk reduction and vendor strategies to address the unmet health needs of specific populations.”

Ellen Kelsay, president and CEO, Business Group on Health, previously told PLANSPONSOR that employers are acting to better inform and educate their workforces to encourage employees to take care of their health.

“They are making sure individuals go back to routine screenings, immunizations and physicals that might have gotten put on the back burner,” she said. “Because if employees don’t, there is a concern there will be bigger health conditions down the road.”

The Health Disparity Assessment is part of a suite of solutions Aon is building to address diversity, equity and inclusion (DE&I) in the workforce. Other solutions in the suite include:

  • Health Equity Monitor, which examines claims-based social determinants of health analytics;
  • DEI Opportunity Analysis, which reviews benefits against emerging DE&I trends;
  • DEI Program Engagement Analysis, which reviews engagement by population segment to identify differences in value derived; and
  • Benefit Design and DEI Point Solution Evaluations, strategy development for family-building benefits (e.g., infertility treatment, fertility treatment, fertility preservation, adoption, surrogacy/gestational carrier and fostering) and solution implementation for transgender equity.

“We will utilize these tools with employers to help them make better decisions that improve the health status and lower medical plan costs for a diverse U.S. workforce,” says Shelly MacConnell, vice president of health solutions for Aon.

More information about Aon’s health solutions is at https://www.aon.com/home/solutions/health.html.

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