May 5, 2010
Plenty of baby boomers are delaying retirement or returning to work to help replenish savings lost during the economic downturn. But a growing number of unemployed baby boomers are being forced to retire early in order to collect much-needed Social Security benefits.
Investment News reports that according to the Center for Retirement Research at Boston College, 40 percent of workers ages 45-59 now expect to retire later than they did before the market downturn. Most said they were planning to work four or more years past their original anticipated retirement date. In addition, according to an AARP survey conducted earlier this year, 8 percent of workers 45-64 have taken on a second job, while 19 percent have increased the number of hours they work.
Randy Kamen Gredinger, 59, is one such example: She is planning to work longer than she originally expected in her job as a psychologist to help replenish her nest egg. "I love what I do," she told Investment News, "but the challenge for me is coming to grips with the fact that we have to work, rather than thinking of it as a choice."
"People are really husbanding their resources and trying to save more," noted Alicia Munnell, director of the Center for Retirement Research, who was quoted by Investment News. "Some are trying to work longer, but unfortunately, the financial crisis was accompanied by a dramatic decline in economic activity."
Indeed, National Public Radio reports that the unemployment rate for people 55 and older reached 7.2 percent--the highest level ever recorded in this age group. And a recent study by the Pew Economic Policy Group indicated that a third of unemployed older workers have been out of work for at least a year.
For this reason, the government is now finding that a growing number of unemployed baby boomers are simply retiring early. Last year, nearly 3 million people started collecting Social Security retirement benefits--a much higher number than anticipated. Similarly, Nextgov.com reports that the Social Security Administration is trying hard to keep up with increasing claims, which are being attributed to baby boomer beneficiaries and financially strapped families. According to Commissioner Michael Astrue, SSA expects it will receive 375,000 additional retirement, dependent and survivors' claims and 730,000 more disability claims than predicted two years ago.
Retiring earlier than planned would not only force people to live more frugally; NPR points out that the trend could conceivably mean big problems for the federal government. Since older workers typically earn their highest incomes, they give the government the highest taxes. Therefore, a large number of older workers switching from paying taxes to collecting benefits could widen the budget deficit even more.
Compiled by Yaffa Klugerman
"For Baby Boomers, the Job Market's Even Worse," National Public Radio, May 2, 2010, Marilyn Geewax
"For Boomers, Reality Bites," Investment News, May 2, 2010, Jessica Toonkel Marquez
"Social Security Turns to the Web to Manage Escalating Workload," Nextgov.com, May 4, 2010, Aliya Sternstein