Do Early Retirement Packages Strain the Social Security System?

September 29th, 2009 · No Comments

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Not only does the baby boomer tsunami already threaten the Social Security (SSI) system, the growing number of workers laid off or offered early retirement packages places a further strain on the already overburdened system. For the next several years, the SSI will pay out more than it gains.

Aging seniors are finding it necessary to make tough decisions whether to claim their SSI benefits early or wait until their full retirement.

Many seniors expected to work well into retirement age, whether for economic reasons or because they enjoyed their career. Now, with their sometimes-forced retirement, they find their only choice is to tap into their SSI benefits in order to survive financially. Unfortunately, that means lower monthly SSI payments for their rest of their lives.

The number of Americans still working in their 60s has steadily increased since the 1990s according to the Bureau of Labor Statistics, from 46 percent to 55 percent.

The number of people who applied for SSI retirement benefits increased from 1.8 million during the last budget year to nearly 2.2 million this past budget period of October through July.

Whether people are signing up for SSI benefits due to job loss, or are using the benefits as a supplement when their hours are cut, the increase is putting a strain on an already burdened system.

The question remains, can the Social Security system support the influx of retirees?

According to the Social Security Administration, the influx of those taking early retirement will not become the burden some would think because the reduced monthly payments are for life. Therefore, the lesser monthly payments pretty much balances out the influx in the number of early retirement applicants.

The real strain will occur when aging baby boomers retire at their predetermined retirement age with full benefits. That time is in the not-too-distant future.