My wife has several boomer patients, in the family practice, she works in, without jobs for months opting for the early Social Security benefits to buy food and pay for the utilities. Many have gone for this option as their unemployment benefits have run out.
These people will basically have no financial capability to prop up our economy even if it bounces back.
This trend is cited in the link below:
http://crooksandliars.com/susie-madrak/unemployment-claims-run-out-many-work
Tuesday May 26, 2009 07:05 am
As Unemployment Claims Run Out, Many Workers Are Opting for Early Retirement By Susie Madrak
It would make more sense for the government to keep extending unemployment benefits until the recession lets up, because the effects of this poverty-inducing trend are far more harmful to the long-term economy than putting out cash now to keep people afloat:
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.
Income Tax receipts for many states will continue to plummet as many states don’t tax social security benefits:
“Many states exclude Social Security retirement benefits from state income taxes. The District of Columbia and 27 states with income taxes provide a full exclusion for Social Security benefits — Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia and Wisconsin.”
Thanks for the great info.