A story in this morning’s news caught me up. Social Security is apparently in trouble because more people than expected are taking early retirement, often after losing jobs and failing to find new ones. This is making demands on S.S. payouts sooner than expected and drawing down the “trust fund.”
But wait a moment, wasn’t the problem last week that boomers weren’t retiring fast enough? The next generation in line is being denied promotions because their elders aren’t quitting fast enough.
It brings to mind the old country-western song, “How can I miss you if you won’t go away?”
The first story:
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.”
The second story:
The financial downturn has left all sorts of casualties in its wake: more unemployment, depressed wages, and greater economic uncertainty. But I’d like to direct my angst at a different target — the baby boomers.
A hidden effect of this crisis is that, in the workplace, as in popular discourse, they simply refuse to get out of the way.
To understand my lament, you have to realize that the oldest of the baby boomers are on the cusp of retirement. For younger generations, this should be a cause for relief. For decades, Gen X-ers like myself have had to hear the standard declarations about the uniqueness of the baby boomers. Maybe they were not the Greatest Generation, but they were the ones who glorified the whole idea of generational identity. For decades, Gen X-ers have had to hear complaints about our political apathy, our popular culture, and our musical tastes.
We have suffered many of these critiques without complaint. Why? Because so many of us worked for so many of them. They were the bosses of the business world. And they were supposed to be retiring very soon, but the recession has changed all that.
In 2008, U.S. workers aged 55 to 64 who had 401(k)’s for at least 20 years saw their retirement balances drop an average of 20 percent. A recent YouGov poll showed two-thirds of this generation have not made the necessary adjustments in their financial planning. This is not a recipe for leaving the workforce anytime soon.
What does this mean for the rest of us? Younger workers who expected promotions when the boomers cleared out are going to have to stew in their own juices. With this job market, looking for a better opportunity elsewhere is not in the cards.
Leaving aside the Boomer bashing, this seems to be a contradiction. Are Boomers retiring early or not? I suspect that some of what’s happening is class based. The managerial and Creative Class 60-somethings are continuing to work because they can and often want to – their skills are relevant, they’re not caught in large layoffs and if they need to they can consult. On the other hand, working class, non college-educated boomers who are laid off aren’t finding jobs – their health care costs are high and they’re expensive to hire. So many of them who can’t find work may be taking Social Security at 62 in spite of the disadvantages (smaller checks, limits on earned income).
Does anyone have statistics on who’s retiring and who’s keeping working?