Job losses, early retirements hurt Social Security

[babylonsister]

Job losses, early retirements hurt Social Security

By STEPHEN OHLEMACHER
Associated Press Writer


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.

Some have no choice.

more...

http://hosted.ap.org/dynamic/stories/U/US_SOCIAL_SECURITY_EARLY_RETIREMENTS?SITE=CONGRA&SECTION=HOME&TEMPLATE=DEFAULT

[Moondog]

1. This will only get worse

before there is any hope that it will get better.

[timeforpeace]

10. Maybe the government giving everybody health care will help.

[bobbolink]

2. Thom Hartmann sees it differently.

[babylonsister]

3. And? Since I don't listen to him, I have no idea how he sees it. nt

[Moondog]

5. + 1

[tabatha]

8. He thinks that people retiring early would open up more jobs for

youngsters.

BUT, if people are retiring early because there are no jobs, that does not help youngsters in finding jobs - i.e. the jobs are not there for anyone, old or young.

[babylonsister]

9. Thank you. nt

[timeforpeace]

11. I like how he refers to himself in the third person, don't you?

[DJ13]

4. I hope this isnt part of a PR campaign to try and reduce benefits

I used to be cynical, but now Im a realist.

[Deja Q]

6. People put their tax money into the system... and for a tangent,

people who put money into "investment" are told over and over ("7% increase every year") and any microprint is barely glossed over. Pretend I'm Mr. Rogers: "Can you spell 'cheating' and 'corruption'?"

The media, however, hypes up what will grab peoples' attention... or if it's otherwise non-news, they'll embellish it.

Take everything with a grain of salt but don't disbelieve either.

And enjoy life.

[defendandprotect]

7. Right and workers are still being forced to support a SURPLUS of $250 Billion a year!!!

Which is regularly being borrowed --

[exboyfil]

15. The surplus is now from the

interest paid by the U.S. Treasury. This is accounting between these two government agencies (Treasury and Social Security). Allan Sloan predicted cash flow related to Social Security would go negative this year and he was right. Here are some articles which explain his opinions. I am not sure I agree with his conclusions (invest portion of Trust Fund into non-Treasury assets), but he explains the issue quite well.

Going forward Social Security collections can no longer be used to paper over general government obligations. As Social Security presents its Treasury Bonds to the Federal government for payment, the government will need to do one or more of the following things:

1. Spend less on other things in the general fund
2. Borrow more
3. Tax more for the general fund
4. Not honor their commitments through different tactics (pushing retirement age back, reducing benefits in various ways (means testing etc), or increasing the withholdings on current workers either percentages or increasing the income cap).

Given the Baby Boomers were saddled with additional Social Security payments over and above what was needed to keep this Pay as You Go system afloat, they are not going to be too pleased to learn that the general populance do not have the political will to do 1. Given the already sad state of the Federal deficit 2 seems to be more unlikely as we go forward. 3 is going to start happening when the tax cuts sunset, and I suspect additional taxes will come in after sunsetting. Then it becomes a question how much can these increase before we get successful avoidance techniques of these taxes.

Another option would be to grow the economy and good jobs so that we have a whole lot more income in the band which subsidizes Social Security ($55-$105K). This would also produce more general fund taxes. If I knew how to do this without triggering other problems (such as a Trade War with our largest debt holders, a significant increase in inflation, or a reduction in our overall competitiveness by reducing skilled immigrant inflow), I would be running for office.


http://money.cnn.com/2009/07/29/news/economy/fixing_social_security.fortune/index.htm?postversion=2009073016

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/17/AR2008031702702.html

http://money.cnn.com/2009/09/15/news/economy/social_security_letters.fortune/

[prostomulgus]

12. I'll bet that a lot of these early "retirees" have other money.

Many have probably been putting money into some other pension or retirement plan. Since they already have money, it really isn't right for them to double dip by also taking money from the SS system. Social Security is for people who really need it.

This is why Social Security benefits need to be means tested. NOW.

[SheilaT]

13. I'm only a year away from early social security.

I have a pension from a job in the 70's that amounts to a whopping $100.00 a month.

And why is the cost of the immoral, illegal wars in Iraq and Afghanistan never considered a liability?

[exboyfil]

14. Do you relly want to stop encouraging people to save for

retirement? In part Social Security is already means tested through the tax code (half of the payments get taxed at an individual's marginal tax rate after reaching a relatively low level). Individuals making about $55-$105K only get to participate at a 15% rate for their contributions above $55K, while those making up to $10K get to participate at a 90% rate.

Lots of promises were given when Social Security was first implemented. Many of them were broken. Do you want to see the remaining ones broken now?

From Social Security website:

file a joint return, and you and your spouse have a combined income* that is
◦between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
◦more than $44,000, up to 85 percent of your benefits may be taxable.

[D-Lee]

17. Early SS "retirees" accept reduced benefits for life -- so ...

They either need the extra money now or, as may happen, have no job and know they will not have extra earning quarters to build up their benefits.

[lunatica]

18. Wrong

If you work you pay Social Security and it is your money when you retire. Look at your paycheck stub. You're paying Social Security

[Statistical]

22. Good way to kill SS.

SS has broad and almost universal support because EVERYONE in the conntry knocks screwing it will be screwing themselves now or their retirement in the future.

If you take away that shield you will see it die to a shadow of its former self within a decade.
You will see bills to let people opt out, or cut the %, or transfer the % (12% of your income) to 401K instead.

Before long SS will be "old person welfare" and will be sneered about by the media as "for the people who didn't take care of themselves and are a BURDEN on society".

[AllentownJake]

16. The collapse continues

Stock prices should start to decline as those assets are liquidated by the retirees and pension funds to pay for retirement.

[SoCalDem]

19. If someone is 62 and has lost the job they planned to stay at for a few more years

taking the early (reduced rate) may be their only choice.. these people may have once planned on working until age 67 or beyond, and then using their home sale (worth a lot less now) as a way to downsize into a secure retirement, but are squeezed into early retirement. The doubly sad thing is that once they claimed early SS, if they DO get another job, they will be limited on how much they can earn without affecting their SS, and they are locked into that lower rate forever :(

[exboyfil]

20. One potential out

has been in the past that if you repay Social Security all that you received you can reset to the later retirement date and get the higher benefit level.

Some folks do this and determine, based upon their health at 65, whether to continue with the lower payment and the cash already received, or go for the higher payment by paying S.S. back. I am not sure what happens with income taxes during those years though. It has mostly been used by confirmed retirees.

[midnight]

21. K&R