In weak economy, more people are filing early for Social Security
In one of the most striking fallouts from the bad economy, Social Security is facing a rare shortfall this year as more people opt to collect payments before their full retirement age. Adding to the strain on the trust are reduced tax collections due to unemployment levels hovering at 9.5 percent.
More people filed for Social Security in 2009 -- 2.74 million -- than in any year in history, and there was a marked increase in the number receiving reduced benefits because they filed ahead of their full retirement age. The increase came as the Social Security retirement age rose last year from 65 to 66.
Nearly 72 percent of men who filed opted for early benefits in 2009, up from 58 percent the previous year. More women also filed for early benefits -- 74.7 percent in 2009 compared with 64.2 percent the previous year.
Jason Fichtner, an associate commissioner at the Social Security Administration, said the weak economy has led more people who lost their jobs to retire early. However, it also has forced some people hit hard by the recession and in need of a bigger paycheck to stay in the workforce longer.
"But we're seeing more people taking early benefits than staying in the workforce longer," Fichtner said.
In the annual report of the Social Security program, released last week, the trustees said that pension and disability payments will exceed revenue for this year and 2011, reflecting the deep recession.
The report forecast that the program would return to the black in 2012 through 2014 but that benefit payments will again exceed tax collections in 2015. For every year after 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.
The trustees did not focus on the growth of early retirees in their report, as they do not expect the early retirees to significantly drain funds over the long term. Early opt-ins receive smaller monthly checks, so they are not projected to receive any more money over a lifetime than they would if they had waited to collect Social Security until their full retirement age.
People entitled to full benefits at 66 would receive 75 percent of their check if they began collecting four years early. Conversely, if they waited until they turned 70, collecting four years late, they would earn 32 percent more.
-- Associated Press