Why Social Security Claims Didn’t Rise During the Pandemic
Labor markets have been nothing short of tumultuous since the onset of the pandemic, and one of the more interesting developments has been the portion of older workers who decided to retire — but weren’t interested in retirement benefits.
Recent data from the U.S. Census Bureau’s Current Population Survey shows that workers ages 70 and up accelerated their retirement plans. But at the same time, there was only a small, disproportionate number of new claims for Social Security retirement benefits.
The likelihood of workers ages 55 and up leaving the workforce was 7.6 percentage points — a 50% increase over pre-pandemic levels, CNBC reported. It should have followed that the number of Social Security benefit claims increased with those workforce exits, but this was not the case. Overwhelmingly, the data showed that while workers ages 70 and older were 5.9 percentage points more likely to leave their positions and retire during the pandemic, older workers younger than 70 left the workforce but did not necessarily retire.
The number of workers applying for Social Security benefits in the 12 months ended in September fell 5% from the same period a year earlier, according to the Social Security Administration — the biggest drop in almost two decades. During the same period, the number of workers ages 65 to 69 who retired actually increased 5%. While it is unclear how many of those who retired early delayed Social Security benefits, the sudden drop-off shows an unusual trend for retirees.
Those who left the workforce prior to age 62 don’t qualify for Social Security retirement benefits, and it’s unclear whether they plan to return to the workforce. Retirees ages 62 and up could simply be putting off claiming benefits until later, when they reach the maximum age of 70 to take distributions, as until recently, federal stimulus support was plentiful in the form of stimulus payments and federal unemployment insurance supplements.
The trend could also suggest that retirees have substantial secondary forms of income from 401(k)s, individual retirement accounts and individual brokerage accounts that sustained them without claiming benefits. This strategy is beneficial for retirees if they are able to pull it off, as the difference between claiming benefits at age 62 versus 70 can be up to 30% more per monthly check.
More From GOBankingRates
- How Much You Need To Be ‘Rich’ in 15 Major Vacation Destinations
- 10 Reasons You Should Claim Social Security Early
- Save on Holiday Decor With This Instant Shopping Hack
- How To Refinance a Mortgage