If you have been watching your 401(k) climb and quietly wondering whether now is the time to walk away from work for good, you are far from alone. A growing number of older workers are doing exactly that and economists think the bull market may be one reason why.
According to Fortune, the numbers tell an interesting story. The labor force participation rate for workers 55 and older dropped to 36.9% in July, down from 37.9% in December. That is a meaningful shift in just a few months. By comparison, workers in their prime years, ages 25 to 54, barely budged, falling only 0.4 percentage points in the same span.
A Strong Market and a Tough Job Hunt
Adam Shapiro, a vice president at the San Francisco Fed, pointed to two forces working together. The S&P 500 is up 13.5% so far in 2026 and has more than doubled since early 2021. For someone who has been building a nest egg for decades, that kind of growth can make early retirement feel not just possible but sensible.
At the same time, finding a new job has gotten harder. The hiring rate is still below 4%, which means the job search itself takes real time and energy. As Shapiro put it, many older workers are likely just retiring instead of grinding through a difficult job hunt.
He also noted that the drop in 55-plus participation since the pandemic ended is comparable to the drop during the pandemic itself. That is a striking comparison.
This Has Happened Before
This is not entirely new territory. A 2023 report from the St. Louis Fed found that the wealth surge in 2020 and 2021 contributed to an earlier wave of retirements. When the Federal Reserve then raised interest rates aggressively in 2022 to fight inflation, asset prices fell, and some of those retirees came back to work.
The pattern suggests that when portfolios are doing well, some older workers decide the timing is right. When markets stumble, the math changes.
More to the Story Than Stock Prices
Not everyone is convinced the market alone explains the trend. RSM chief economist Joseph Brusuelas acknowledges that some baby boomers and Gen Xers have left the workforce because their portfolios have grown. But he says that is not enough to account for how large the decline has been.
He points to other factors, too. There are now 27 million more Americans age 65 and older than there were in 2005. That is simply more people reaching retirement age. On top of that, the job market has stayed in what economists call a low-hire, low-fire environment: few layoffs, but also fewer openings.
A San Francisco Fed report released last week found that the job-finding rate for both unemployed workers and those outside the workforce has declined since January 2023. That reverses the post-pandemic trend and is unusual for an otherwise healthy economy. The researchers wrote that the slowdown may reflect structural forces rather than a typical economic slowdown.
Brusuelas summed it up this way: with the search costs of finding a job so high, and the hiring rate below 4%, what we may be watching is simply a historic exit from the American labor market.
Whether your own retirement timeline is fixed or flexible, the forces shaping this moment. A strong market, a slow hiring environment, and the sheer size of the boomer generation are worth keeping an eye on.
