The Recession's Striking Effects on Social Security: 2009 - 2015

The news report today is that Social Security is facing it’s first-ever shortfall this year as pre-retirement Americans, forced to retire, are choosing to collect their social security payments before their full retirement age.

The economy issues have forced workers to re-look their financial situation; some have borrowed on their 401ks or withdrawn from them in hardship status to pay their bills or keep their homes.  Some are choosing early retirement because they have lost their jobs, been forced to retire, been overwhelmed by increased work due to layoffs and doubling up of job responsibilities causing stresses on their jobs.  Sometimes this stress or  health issues refrain them from continuing to work.

Variables on choices depend on age, skills, finance, health, and/or family situations.  Many families have increased in size due to doubling up when one or more family member loses their job. It is not uncommon for married, adult children along with their children, to move in with their retirement-age parents  Although some retirement age workers are delaying their retirement to continue receiving a larger paycheck, more people are taking early benefits than those staying on the job.

The facts are:

    * more people filed for Social Security (SS) in 2009 — 2.74 million — than any other year in history.
    * statistics show there was a marked increase in people receiving reduced benefits because they fall short of their full retirement age (the SS retirement age rose from 65 to 66 in 2009).
    * almost 72 percent of men opted for early retirement (58% the year before)
    * 74.7 percent of women filed for early benefits (64.2% the previous year)

The trustees of the published annual report of the Social Security released last week have announced that pension and disability payments will exceed revenues for this year and next year.   Although they project that the program could return to normal in 2012 through 2014, benefit payments will again exceed tax collection in 2015.

For every year after that (2015), the report projects that Social Security will be paying out more than it receives in tax collections as 78 million baby boomers begin retiring.

What does early payout of benefits mean? People entitled to full benefits at age 66 would receive 75% of their check if they begin collecting 4 years early, for the rest of their lives.  Conversely, if they waited until they turned 70, collecting 4 years late, they would earn 32% more, for the rest of their lives.