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Boomers Rush to Social Security

Rising unemployment, declining savings and a groundswell of boomers reaching retirement age has pushed up the number of people applying for and collecting Social Security retirement benefits in the past year.

Some 2.6 million Americans began collecting their Social Security benefit during the 12 months that ended Sept. 30, a 19 percent increase over the 2.2 million who took the benefit in fiscal 2008, says Stephen Goss, Social Security’s chief actuary. He called it the highest increase ever.

Likewise, new applications for Social Security retirement benefits climbed by nearly 21 percent between October 2008 and September 2009, well above the projected 13 to 15 percent rise, Goss says. Widespread job losses and a weak labor market spurred more people who needed the money to start taking their monthly benefit, which is available as early as age 62.

At the same time, older people are trying to stay in the workforce longer to recover from the stock market collapse and the free fall in their retirement savings accounts. The percentage of people age 55-plus working now, 37 percent, has declined only slightly from the 38 percent who were working at the peak of the economic boom, according to the Bureau of Labor Statistics.

Yet unemployment for this group, at 6.8 percent in September, is still near a record high.

“What’s going on with these people taking benefits—are they looking for a job, or working part time and taking benefits—that’s something we don’t yet know,” says Richard Johnson, a senior fellow at the Urban Institute and an expert on older worker issues.

People who take early Social Security benefits before age 66, the full retirement age, get a reduced monthly amount. And that benefit is further reduced for most people who earn more than $14,160 this year. But for people who lost an income or are underemployed, taking a reduced benefit may be necessary to cover household expenses.

“People are taking their benefit early as a last resort in some cases,” says Sara Rix, a policy adviser for AARP. “They have no alternative.”

Rix says people need to think seriously about the consequences of taking early retirement benefits and consider the options. “Is it absolutely necessary, or could they make it by cutting back expenditures or perhaps picking up a second job or even moving into a part-time job while they’re looking for a full-time job?” she says. “Collecting a benefit at 70 almost doubles what they’d get at 62.”

Alicia Munnell, director of the Center for Retirement Research at Boston College, also points out that taking a reduced benefit now may diminish one’s quality of life later on.

“Claiming a lower benefit may not seem that bad in your 60s, but in your 80s, it will be noticeable because some of your savings will be used up,” Munnell says. “You’ll be left primarily with your Social Security benefit.”


Carole Fleck is a senior editor at the AARP Bulletin.

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