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Some are putting it off but more are retiring than not. From the NYT:

Then if you assumed that those five million people you added into the labor force didn’t get jobs, that would bring the total number of unemployed people up by five million, to a total of about 17 million. That would bring the overall unemployment rate to 10.7 percent.

This exercise, though, assumes that the entire drop in the labor force participation rate from January 2009 to the present is a result of discouraged people giving up on looking for work. It ignores the fact that the baby boomers are hitting retirement age, meaning that demographics would probably bring down the labor force participation rate even if the economy were booming. Gary Burtless, an economist at the Brookings Institution, estimates that half of the decline in the labor force participation rate “can be traced to an aging population.” The calculation above also ignores the fact that a higher share of young people are going to college, and are staying out of the work force temporarily while they improve their skills.

Because of these factors, it’s hard to know what the “right” labor force participation rate should be right now. It should probably be higher than the 63.6 percent recorded for September — since there are indeed a lot of discouraged workers out there who want to work but have given up looking — but we don’t know precisely how much higher.

From the Washington Post:

The ‘demographics’ story

But a number of economists are arguing that the recession is distracting people from the real story — long-run demographic trends that have nothing to do with the current economy. Baby boomers are starting to retire en masse, which means that there are fewer eligible American workers.

Demographics have always played a big role in the rise and fall of the labor force. Between 1960 and 2000, the labor force in the United States surged from 59 percent to a peak of 67.3 percent. That was largely due to the fact that more women were entering the labor force while improvements in health and information technology allowed Americans to work more years.

But since 2000, the labor force rate has been steadily declining as the baby-boom generation has been retiring. Because of this, the Federal Reserve Bank of Chicago expects the labor force participation rate to be lower in 2020 than it is today, regardless of how well the economy does.

In a March report titled “Dispelling an Urban Legend,” Dean Maki, an economist at Barclays Capital, found that demographics accounted for a majority of the drop in the participation rate since 2002.