Social Security strained as jobless retire early
For the first time since the Reagan era, the safety net for the nation's elderly will pay out more than it collects in taxes to the tune of $10 billion next year and $9 billion in 2011. With $2.5 trillion in surpluses in its coffers, the outlays won't bankrupt Social Security. But the amounts do get tagged onto the nation's ballooning federal deficit, which is expected to reach $1.58 trillion by September 30, the end of the government's fiscal year. The cause is simple. Unable to find jobs, older workers and those able to claim disability are instead opting for a paycheck from Uncle Sam.
Nearly 2.2 million people applied for Social Security retirement benefits from start of the budget year in October through July, compared with just under 1.8 million in the same period last year, an increase of 23 percent, according to the Associated Press. Disability claims have climbed 20 percent. Though increases were anticipated by agency officials as the vast baby-boomer generation nears retirement age, the number of applications has outpaced expectations.
"A lot of people who in better times would have continued working are opting to retire," Professor Alan J. Auerbach told the Associated Press. "If they were younger, we would call them unemployed," said Auerbach, who teaches economics and law at the University of California, Berkeley.
The recession is also pushing up the number of claims for disability benefits. In a typical year, some 2.5 million Americans seek disability benefits through Social Security, said Stephen C. Goss, the Social Security Administration's chief actuary. Those applications are expected to hit 3 million by September 30, Goss told the AP.
Some 51 million Americans receive retirement, disability or survivor benefits through Social Security. The average monthly benefit for retirees is $1,159, according to the agency's web site. Disabled workers receive an average $1,062 a month, based on June data.
As bad as things may seem, Social Security is set to get back on track in 2012, but is projected to resume deficits in 2016 unless Congress acts to fix the program, as it did in the 1980s. Early in that decade, faced with a short-term financing crisis, lawmakers, urged by President Ronald Reagan, made numerous reforms that included raising the age at which Americans qualify for retirement benefits.