More Than 1 Million Baby Boomers Are Secretly Unemployed

early retirementThe Bureau of Labor Statistics released its tabulation of the monthly unemployment rate, showing the jobless rate dipped to 7.5 percent in April. But that leaves out one major segment of the population: Those forced into retirement. While older Americans were less likely to lose their jobs in the recession, it's well known that they were far less likely to find a new one if they did, in part, because of age discrimination. So some gave up and tapped their Social Security benefits -- becoming retirees.

Early Retirees Were Kicked Out Of The Workforce
How many Americans are forced into retirement because they couldn't find work? At the request of AOL Jobs, Matthew Rutledge, an economist at the Center for Retirement Research at Boston College, attempted to estimate the size of this group that remains invisible to the BLS. What he found: At the height of the recession, as many as 53,000 extra Americans were retiring early each month. In total, the recession has driven around 1.4 million additional Americans to collect Social Security early.

Why So Many?
No agency collects data on early or forced retirement. But Social Security does release how many people have started to claim benefits each month. Rutledge, a research economist, estimated how many people one would expect to be claiming benefits if there hadn't been a recession, and then looked at the difference between the prediction and the reality. And that difference is stark.

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Between June 2008 and June 2010, an average of 39,100 extra people claimed benefits each month than past trends predicted. In the 12-month period ending in November 2010, the average peaked at 53,192 monthly additional claims. (See the chart below.)

Financial Crisis Causes A Big Jump
The official unemployment rate in November 2010 was 9.8 percent. But in the previous two years, more than 1.05 million extra Americans had claimed Social Security. If these people were added to the unemployment rolls, the jobless rate that month would actually have been 10.4 percent -- higher than at any point since 1983. It's an especially stunning number, given that the trend for almost 20 years has been for people to retire later in life.

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But then, in 2011, the number of claims began to go down. In fact, in the 12-month period ending May 2012, an average of 4,000 fewer people claimed Social Security than expected each month. That isn't because America's older workers suddenly found lucrative employment, but because so many had claimed their benefits already.

"You're someone who's turning 64 in 2012, and you've looked at how long you've worked, and decided that's when you want to claim," explained Rutledge. "And the recession happens, and you lose your job, or your stock portfolio goes in the tank, or your family really needs your help, your adult child moves back. So you decide you want to claim earlier."

A Sudden Slump
A person is eligible for full retirement benefits at 66 (if born between 1943 and 1954 -- the retirement age is older the younger you are). But a person can claim as early as 62, if they're willing to take a cut. By 2012, it seems that a lot of those 62-to-65-year-olds had already put themselves on the Social Security rolls, leading to a slump in the numbers. As Rutledge put it: "The elephant has been passed through the snake."

But the snake has left behind a stinking pile. In the summer of 2012, the number of claims once again rose above expectations, and has stayed elevated ever since. This may be because long-term unemployment remains so high. If a person turns 62 and has been without work for a year and a half, Social Security is probably a tempting proposition.

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But still, there have been just 133,000 excess Social Security claims in the past two years, a far cry from the wrenching figures of winter 2010. If these are people who would otherwise be unemployed, it would hardly nudge the jobless rate at all. But it still adds up. Between March 2008 and March 2013, 1.4 million more Americans have opted for Social Security than expected.

A bad gamble for a healthy lady
Social Security claims are by no means a perfect way to judge who's retiring early because they can't find work. After all, people can start collecting Social Security benefits while still looking for work. Or they may retire and live off other funds before deciding to cash in on Social Security later on.

But multitudes of older Americans clearly did take advantage of Social Security before the official retirement age. And for many, that will come at a cost. Those who start collecting at age 62 see a 25 percent reduction in benefits. If you were to die at 70, that's a pretty good deal, since you had an extra four years. But if you live into old age, that becomes a sizable cut.

"If you're a healthy woman, you're going to end up costing yourself a lot of money," explains Rutledge. "If you're a man in poor health, it might actually make sense."

If you were laid off in the recession, even better. Research suggests that may have cut your life expectancy by as much as three years.




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134 Comments

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Bob

Charles,
Your insight is only comparable to your IQ. One can see at the outset the dim brilliance of intelligence looming in the vast expanse of space that is between your hearing organs. Your basic insight of food-shelter-clothing not only adorn your insight they set you apart as a non-caring human devoid of any sense of synergy that comes from diversity. We the people of the world only ask for your kindness not your hate.

May 17 2013 at 7:54 PM Report abuse rate up rate down Reply
Rhianon

I am 50 and I'm not working anymore unless I get bored and choose to go back to work. I have stuck back almost $200,000.00 all these years. While everyone is out blowing & going, I was working, saving & investing. Everything I have is paid for and no credit card debt. If I can do it single in a man's world, then I don't feel sorry for any of you who are unemployed, homeless & broke. God gave you a brain. Use it.

May 08 2013 at 1:01 PM Report abuse rate up rate down Reply
kmcewan007

THIS IS WAHT IV BEEN SAYING THE RATE OF UNEMPLOYMENT IS SOOOO WRONG
THERE ARE MANY MANY PEOPLE STILL LOOKING FOR JOBS AND WITH ALL THE NEW CUTS BY THE GOVERMENT THERE WILL BE MORE
SO DONT TELL US THAT UNEMPOLOYMENT IS GETTING BETTER ITS NOT!!!!!!!

May 08 2013 at 10:48 AM Report abuse rate up rate down Reply
hmadden

Let's see....if we just remove anyone who can't find a job and has given up from the statistical universe of "job seekers", then eventually, when everyone is out of work, the unemployment rate will be zero. Brilliant. At least somebody in the government thinks so...

May 08 2013 at 2:18 AM Report abuse +1 rate up rate down Reply
Kent

This is interesting. I say that, because my wife has to do hiring from time to time. She would rather have someone in his or her 40s or 50s, rather than someone his or her 20s or 30s. Younger people think they are entitled to a job. Older people understand that they need to prove themselves regularly.

By the same token, young people seem to get in a snit, if you ask them to stay for every 5 minutes past their normal quitting time, or ask if they can come in early to get on a conference call with people in Euriope. Older workers aren't clock watchers, and they are more willing to rearrange a schedule in order to work beyond the typical work day.

And further, older people aren't posting onto Facebook or Twitter about how bad their boss is, or how lousy the company is the way people in their 20s do.

May 07 2013 at 3:24 PM Report abuse +1 rate up rate down Reply
hojdik

This situation is just awful! My husband is hanging in at his job so far but he's really feeling the pressure. Before I talked him into dyeing his hair and updating his wardrobe a bit, his co-workers were calling him "Gramps" and chiding him alot. I told him to fly as much under the radar as possible. He was also smart by not accepting a higher position or transfer(those people are gone). He's just hoping to hang in there as long as possible before the management decides to "downsize" the people his age and he is forced to retire too. Even if you're frugal and careful with your expenses, the savings won't last nearly as long as we'll need them. It just seems that noone in Washington is concerned with the big picture. The price of everything is going up and we will be stagnant in our income. There WILL be a point where all of us will no longer be able to pay taxes, fees, ect. and still be able to eat and keep a roof over our heads. What is it going to take to make them listen to us?!

May 07 2013 at 12:48 PM Report abuse +1 rate up rate down Reply
beverlyamy1

the 47%

May 07 2013 at 12:11 PM Report abuse +1 rate up rate down Reply
qpbass

AND THEN there are those of us who got tore up at our jobs, and literally thrown under the bus....Busted up shoulders, blown backs, wrecked knees.....In our 50's... Turned down for SSDI....And no available help to learn new skills to continue working....Just thrown under the damned bus!

May 07 2013 at 11:42 AM Report abuse rate up rate down Reply
1 reply to qpbass's comment
SeaboardStation

I agree, used and abused, then thrown to the curb. I can't wait for some of these young folks who have bashed folks like us to get old and get the treatment we've gotten.

May 07 2013 at 1:24 PM Report abuse rate up rate down Reply
FreeToLive2013

how about the millions of us that were and are not eligable to collect unemployment... They lie so much!

May 07 2013 at 11:03 AM Report abuse +7 rate up rate down Reply
RMS

I have been saying this for years! I know a few people who retired a lot sooner than they would have otherwise due to unemployment and age discrimination. I'm one of that group, but I still have six years to go before I can start to collect SSI benefits. In the meantime, I'm stuck with part time retail work to try and make it through each month.

May 07 2013 at 10:39 AM Report abuse +5 rate up rate down Reply

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