Vol. 73/No. 24      June 22, 2009

Since the current federal fiscal year began October 1, claims have been running 25 percent ahead of last year. This is 10 percent above what Social Security officials were projecting, according to Stephen Goss, chief actuary for the Social Security Administration.

For those who retire at age 62 instead of 66, Social Security benefits are reduced lifetime by as much as 25 percent. Despite these reductions those choosing this option are rapidly rising, even though many workers face economic pressures to stay in the workforce to make ends meet.

A December poll by CareerBuilder reported that 60 percent of workers older than 60 said they planned to postpone retirement. However figures from 2007 show that 42 percent of men and 48 percent of women decided to collect Social Security retirement benefits upon becoming 62 years old.

Many early retirees are probably laid-off workers, Goss told the Chicago Tribune, who are claiming Social Security early despite reduced benefits because of the financial uncertainties they face.

With fewer workers covered by union contracts that protect seniority, employers are laying off older workers with the most time on the job more rapidly. Many facing greater difficulties finding work are opting for early retirement. Goss expects these numbers to continue rising as millions will exhaust unemployment benefits later this year or early in 2010.

Also affecting many workers is a significant decline in the value of funds they had put away for retirement in 401(k) investment plans. Last year more than 58 million U.S. workers placed a portion of their paychecks into these plans, which employers have been promoting as an alternative to company-provided pensions. According to Fidelity Investments, the average 401(k) balance plummeted 27 percent over the past year, eliminating in some cases tens of thousands of dollars of workers’ retirement funds.  
 
 
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