Social Security strained by early retirements

[mmr]

Going forward, it looks like Social Security will be a net seller of Treasuries sooner than anticipated - hope the central bank of China is ready to pick up the slack.

http://apnews.myway.com/article/20090927/D9AVHRDG0.html

Social Security strained by early retirements

WASHINGTON (AP) - Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.

What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security.

"A lot of people who in better times would have continued working are opting to retire," said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. "If they were younger, we would call them unemployed."

Job losses are forcing more retirements even though an increasing number of older people want to keep working. Many can't afford to retire, especially after the financial collapse demolished their nest eggs.

Who could have known?

[audrey_girl]

Re: Social Security strained by early retirements

wouldn't it be rational behaviour to jump in as soon as you can and get the ss benefits before they stop giving them out?

do you think this is starting to occur now too?

people understand that ss benefits will either be severely restricted or gone altogether 7,8, 10 years down the road - and this is prompting people to retire early?

my understanding is that you can take $x.xx as a monthly benefit at 61 or 61 or $x.xx (+ more money) at 70.

given the current state of affairs, isn't it logical/rational to take $x.xx at 61?

[jk]

Re: Social Security strained by early retirements

if you take benefits early but are still working, the benefits are essentially all taxed away. if you're still working you have to wait until full retirement age - 66 for baby boomers - to not lose it all back in taxes. most people are not thinking in terms of taking the benefits before they disappear [just as most people are still not buying gold], and the future loss of benefits will more likely be to inflation than to the program disappearing imo. [btw, i have read that current soc sec payments would be 70% higher were it not for the various "adjustments" made in the calculation of cpi over the last 20 years.]

there are now, for the most part, 2 main subgroups of baby boomers: those who will never retire except for reasons of severe health problems, because they can't afford to retire; and those who are unemployed or will soon lose employment, and will never find another job. the never-work-again group will keep job hunting while their resources hold out, maybe call themselves "consultants" at some point along the way, but then start taking social security early to keep food on the table. these "retirements" are being forced on them.

[vinoveri]

Re: Social Security strained by early retirements

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large.

this increase in "disablity claims" is also striking. people are just using/playing the system for all they can; higher a lawyer, pay them a fee, and have a good shot at getting classified as "disabled" and getting the gov to send you a check for $500-1000 for the rest of your life (along with Medicaid). The middle class is heading for extinction.

[jk]

Re: Social Security strained by early retirements

this increase in "disablity claims" is also striking. people are just using/playing the system for all they can; higher a lawyer, pay them a fee, and have a good shot at getting classified as "disabled" and getting the gov to send you a check for $500-1000 for the rest of your life (along with Medicaid). The middle class is heading for extinction.

after a year on soc sec disability, they get mediCARE.

[don]

Re: Social Security strained by early retirements

Predictable MSM reporting. Ignores their previous reporting of the 'pressing' problem of seniors staying too long in the workforce- over 1/3 of Americans 65 and over are working (4% in France)- denying younger workers job opportunities was the applied MSM spin. That was so yesterday...no, just last month.

Seniors may be aging but they're quick.

[pangea]

Re: Social Security strained by early retirements

Check this out.

In May this year, four months ago, the CBO said this wouldn't happen until 2016:

http://www.usatoday.com/money/econom...medicare_N.htm

This quote from May:

Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.

To compound this, in the same article, they say that that back in 2008, they had projected an $86B surplus.

Again, from MAY.

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

So let me summarize:

1. Now, social security starts adding to the debt NEXT YEAR.
2. Four Months ago, they said it would take SIX MORE YEARS.
3. A Year ago in August, they figured we'd have almost $100B more in 2010, and thought we had until 2018.

Here is the 2008 evidence:

http://www.edmondsun.com/opinion/loc...yword=topstory
How is that not disturbing?

All iz well!

-Pangea

[jk]

Re: Social Security strained by early retirements

Predictable MSM reporting. Ignores their previous reporting of the 'pressing' problem of seniors staying too long in the workforce- over 1/3 of Americans 65 and over are working (4% in France)- denying younger workers job opportunities was the applied MSM spin. That was so yesterday...no, just last month.

Seniors may be aging but they're quick.

BOTH trends are happening! see my post [#3] above.

[ThePythonicCow]

Re: Social Security strained by early retirements

wouldn't it be rational behaviour to jump in as soon as you can and get the ss benefits before they stop giving them out?

do you think this is starting to occur now too?

people understand that ss benefits will either be severely restricted or gone altogether 7,8, 10 years down the road - and this is prompting people to retire early?

my understanding is that you can take $x.xx as a monthly benefit at 61 or 61 or $x.xx (+ more money) at 70.

given the current state of affairs, isn't it logical/rational to take $x.xx at 61?

I for one am not worried that they will stop handing out Social Security altogether. If that happened, it would be part of some larger changes that will just have to be dealt with when I see them.

You can start collecting Social Security at age 62 (not 61). You get your first check at the end of the first full month after the month you turn 62, as best I recall. The later you start, anytime between ages 62 and 70, the more you will collect per month. The so-called "full retirement" age of 66 seems to be just some arbitrary midpoint along that curve.

The longer you wait to start collecting, the more you can collect, for two reasons. First, if you remain in a good paying job longer, then you will have more good paying years contributing to Social Security, and the more you put in, the more you get out, roughly speaking. Second if you start collecting later, the actuarial tables will predict you have fewer years left to collect so the more they will pay you per month, again roughly speaking.

One can also "change ones mind." One can start collecting early on and then, if one has the cash, elect to start all over again, with an actuarially favorable later starting year, by returning all the cash (no interest charged) you have collected so far and the proper form. This can be a favorable gamble for people who expect to live a long time (have "good genes", healthy life style and no serious chronic illness.) So for people in good financial and medical health, an early start on collecting Social Security is not an irrevocable decision.

[jk]

Re: Social Security strained by early retirements

the "full retirement" age has big implications for the tax treatment of benefits if you have other income. i just turned 62 and was going to start collecting whatever i could before it got inflated away, but discovered i'd give it all back in taxes.

[pangea]

Re: Social Security strained by early retirements

i just turned 62 and was going to start collecting whatever i could before it got inflated away, but discovered i'd give it all back in taxes.

Fantastic point that very very few people understand. They have you by the balls. I would assume that less than 1-2% of the population understands the ramifications of this statement.

If they did, they would not have so merrily went along with the program.

1000% correct.

It reminds me of this excellent itulip video that I can't watch too many times. It really does bring chills. It's one of the best ways to help people start to understand the space we are in. If you're new here or you haven't seen it, or haven't seen it in a while, it's worth another view.

IT NEEDS TO BE UPDATED.

http://www.youtube.com/watch?v=pZsY1rFr_yw

-Pangea

[jimmygu3]

Re: Social Security strained by early retirements

It reminds me of this excellent itulip video that I can't watch too many times. It really does bring chills. It's one of the best ways to help people start to understand the space we are in. If you're new here or you haven't seen it, or haven't seen it in a while, it's worth another view.

IT NEEDS TO BE UPDATED.

-Pangea

UPDATED VERSION:

[ThePythonicCow]

Re: Social Security strained by early retirements

but discovered i'd give it all back in taxes.

There's one way to avoid many taxes - stay poor .

[santafe2]

Re: Social Security strained by early retirements

So let me summarize:

1. Now, social security starts adding to the debt NEXT YEAR.
2. Four Months ago, they said it would take SIX MORE YEARS.
3. A Year ago in August, they figured we'd have almost $100B more in 2010, and thought we had until 2018.

Excellent reporting, thanks.

[cindykimlisa]

Re: Social Security strained by early retirements

there are now, for the most part, 2 main subgroups of baby boomers: those who will never retire except for reasons of severe health problems, because they can't afford to retire; and those who are unemployed or will soon lose employment, and will never find another job. the never-work-again group will keep job hunting while their resources hold out, maybe call themselves "consultants" at some point along the way, but then start taking social security early to keep food on the table. these "retirements" are being forced on them.[/quote]

There is another sub-group much larger than your two above: I am one of these. They are the ones who planned ahead, have little debt and will be able to retire early or at the normal time with somewhat less because of the recent events in the Fire economy. I am taking SS early, not because I need it then but because getting less early will help to reduce my long term tax bracket and it works better on a present value basis considering my projected life span, future taxes on SS and future needs basis analysis of SS and considering they my run out of funds to pay more than 70% of future benefits.

Cindy