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Unemployment Pushes Workers Into Early Retirement

A job-seeker fills out an application at a senior job fair in Palatine, Ill., in 2003. Many older workers, however, have been pushed to draw on their Social Security benefits due to high levels of unemployment.
Tim Boyle
Getty Images
A job-seeker fills out an application at a senior job fair in Palatine, Ill., in 2003. Many older workers, however, have been pushed to draw on their Social Security benefits due to high levels of unemployment.

For some older Americans who lost jobs in the Great Recession, Social Security is filling the void left when unemployment benefits run out.

The Social Security Administration had predicted there would be a 15 percent increase in retirement applications last year as baby boomers reached retirement age. Instead, the increase was 20 percent.

"That's a significant amount," says Jason Fichtner, chief economist at the Social Security Administration.

Filing For Early Retirement

Fichtner says you might expect fewer people to retire early after the beating so many 401(k)s took when the markets crashed.

"But we also see that there are those people who at age 62 or 63 might have lost their jobs and find it harder to find new employment and decide to take retirement benefits earlier," says Fichtner. "On net, there seems to be more people filing for early benefits than delaying."

Jann Dolan, 63, is about to become one of those early filers. She worked as a school psychologist until about 10 months ago when she was laid off. She says she's applied for dozens of jobs, even those requiring far less education.

"I had actually applied to a day care center," Dolan says. "And this woman called me, the director of the day care center, and ended up telling me that I wasn't qualified for the job."

Dolan had always planned to keep working.

"I really wanted to work until 70," she says.

But her plans have run up against a reality many older Americans are facing. Dolan is uninsured and her unemployment checks will run out soon. She visited her local Social Security office because she was running out of options.

"I just never ever intended to take early retirement, for a lot of reasons, for financial reasons and it was just not my idea of what I wanted to do," Dolan says. "It's still not my idea."

A Penalty For Early Payments

For most, the full retirement age is currently 66. But people can start drawing Social Security as early as 62. Drawing early, however, cuts monthly payments.

"One of the most powerful things you can do to have a secure retirement is to work longer," says Alicia Munnell, director of the Center for Retirement Research at Boston College. "If you can claim your Social Security benefits at full retirement age instead of 62, you'll just be so much better off."

Just because someone starts drawing Social Security doesn't mean they should give up on finding work, says Jean Setzfand, the director of financial security for AARP.

"Tap into Social Security, continue to look for a job," Setzfand says. "Once you find the job, stop taking Social Security."

Continuing To Work

In other words, if you decide to file for Social Security early, you still have options. So, don't assume that just because you've received a few checks you are locked into lower payments for life.

Bob Daly lost his job in international logistics about a year ago and when he turned 62, he started drawing Social Security to help pay the bills.

"You know, I'd still rather be working is what it comes down to," Daly says.

He's still looking for jobs in his field, forcing himself to get on the computer every day and search the job boards. But at this point Daly says he'd be open to just about anything.

"I believe it's going to happen," he says. "I truly believe that it will happen, that I can stand there and say, 'Thank you very much Uncle Sam, but I'll wait a little longer.'"

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Tamara Keith has been a White House correspondent for NPR since 2014 and co-hosts the NPR Politics Podcast, the top political news podcast in America. Keith has chronicled the Trump administration from day one, putting this unorthodox presidency in context for NPR listeners, from early morning tweets to executive orders and investigations. She covered the final two years of the Obama presidency, and during the 2016 presidential campaign she was assigned to cover Hillary Clinton. In 2018, Keith was elected to serve on the board of the White House Correspondents' Association.