Long-Range Planning Department

Since consumers who retire are less likely to use credit than those who continue working, a surge in retirement will have a fairly dramatic effect on consumer and mortgage credit. Remember the "Baby Boomers"? They were born between 1946 and 1964, when birth rates sharply exceeded those of the earlier depression years. Those born in 1946 are now 56 and will reach 62 in six more years. Past experience suggests that many of these consumers will not wait to retire until they are 65. Over the past decade more than half of those receiving social security benefits chose to receive the payments beginning at age 62. Further, 70 percent of eligible retirees chose to retire prior to age 65.

The table below shows the dramatic increase in the number of people aged 60 to 64 from 2000 to 2025. Given our past experience, these are likely retirees. Between 2000 and 2005, the number of likely retirees will rise by 19 percent and will increase by 51 percent in 2010. Moreover, the number of years in which retirees will receive benefits is increasing with greater longevity. Offsetting this trend to some extent is an increase in the "official" retirement age. That will increase by two months per year until it reaches 66 in 2008. It will not rise again until 2017, when it will be set at 67. These highly predictable changes will have dramatic effects on consumption patterns and the accompanying use of credit.

Source: Population Reference Bureau