The other economic "shoe" is dropping

 Seems once again the people are refusing to "think" as the government
expected them too!
Time for the re-education camps!

BAHO

Link:
http://www.latimes.com/news/nationworld/nation/la-na-retirement24-2009may24,3,4729130.story

Reporting from Washington -- Instead of seeing older workers staying on the
job longer as the economy has worsened, the Social Security system is
reporting a major surge in early retirement claims that could have
implications for the financial security of millions of baby boomers.

Since the current federal fiscal year began Oct. 1, claims have been running
25% ahead of last year, compared with the 15% increase that had been
projected as the post-World War II generation reaches eligibility for early
retirement, according to Stephen C. Goss, chief actuary for the Social
Security Administration.




Many of the additional retirements are probably laid-off workers who are
claiming Social Security early, despite reduced benefits, because they are
under immediate financial pressure, Goss and other analysts believe.

The numbers upend expectations that older Americans who sustained financial
losses in the recession would work longer to rebuild their nest eggs. In a
December poll sponsored by CareerBuilder, 60% of workers older than 60 said
they planned to postpone retirement.

Goss said it remained unclear whether the uptick in retirements would
accelerate or abate in the months ahead. But another wave of older workers
may opt for early retirement when they exhaust unemployment benefits late
this year or early in 2010, he noted.


The ramifications of the trend are profound for the new retirees, their
families, the government and other social institutions that may be called
upon to help support them.

On top of savings ravaged by the stock market decline and the loss of home
equity, many retirees now must make do with Social Security benefits reduced
by as much as 25% if they retire at age 62 instead of 66.

"When the recession ends and the economy bounces back, there may be a band
of people for whom things will never be the same again. They'll still be
paying the price for 10, 20, 30 years down the road," said Cristina Martin
Firvida, director of economic security for AARP, the nation's largest
membership organization for people 50 and older.

For Herman Hilton, 66, of Jacksonville, Fla., a lean 6-foot-2 electrician
with a bushy gray beard, the decision to lay down his pliers and screwdriver
was born of frustration.

For at least the last 10 years, as he wired new buildings, he was looking
toward retiring as soon as he hit 66 and qualified for full benefits. And
last fall, like millions of other older workers, Hilton put his "golden
years" plan on hold when his 401(k) lost more than a third of its value.

Then last month, his life took another unwelcome turn: Hilton's foreman
pulled him aside to tell him that he was being laid off. For several weeks,
Hilton collected unemployment insurance. But he soon decided to call it
quits and file for Social Security.

"I can live on what I have," Hilton said. "But it's not what I planned on. I
won't have the comfort factor of as much of a safety cushion."

That cushion is important. As Americans live longer, the elderly are
increasingly at risk of outlasting their financial assets. That's a serious
problem for them and their families, who are often called upon to provide
assistance.

Because benefits are reduced for people who retire early, the surge in
retirements should not have any long-term effect on the solvency of the
Social Security system, although it will probably add to the near-term
budget deficits confronting the Obama administration, Social Security's Goss
said.

The full consequences of retirement decisions made in hard times will become
apparent when people who retired early begin to exhaust their savings.

"As they get into their 70s and 80s, it will be increasingly inadequate,"
said Alicia H. Munnell, director of the Center for Retirement Research at
Boston College.

The most severe effect will probably fall on the unemployed widows of
workers who retire early, Munnell said. Survivors' benefits also take a
deeper cut when people retire early -- reduced as much as 30% for retirement
at 62. Because women tend to live longer than men, that leaves them more
vulnerable to running out of money as expenses for assisted living and other
costs rise in advanced old age.

Significant numbers of workers have long chosen to retire early. In 2007,
the most recent year for which statistics are available, 42% of men and 48%
of women began collecting Social Security retirement benefits at age 62, the
first year of eligibility.

The current recession, the worst since the Depression, is striking when
older workers are by historical standards unusually vulnerable. Though older
workers in previous recessions were less likely than their younger
counterparts to be laid off, that advantage has eroded in recent years, said
Munnell, who analyzed more than two decades of Labor Department data on
layoffs.

Fewer workers are now protected by union contracts that require newer
employees to be laid off first. And older workers now typically have less of
a seniority advantage in a workforce that more frequently switches jobs.

Once they lose their jobs, older workers have a harder time finding new
ones. On average, it takes laid-off workers 55 and older nearly a month
longer than their younger counterparts to find new employment, and the gulf
has been growing recently, according to the U.S. Bureau of Labor Statistics.

Goss said it was theoretically possible that people who claimed retirement
benefits during the recession would resume working once the economy
improves.

Yet experience suggests that retired workers are unlikely to return to work
in large numbers, particularly not to full-time jobs that would allow them
to make up their earnings losses while they were out of the workforce, said
Paul N. Van de Water, a former senior policy official at the Social Security
Administration and now a senior fellow at the Center on Budget and Policy
Priorities, a Washington think tank.

"It's partly a question of intent," Van de Water said. "It's partly a
question of your skills not being kept up to date."

 
It's partly a question of bias against older workers.