The current economic downturn has forced many Americans to lose their jobs. With big job losses and early retirement from laid-off seniors making it difficult for the Social Security to pay out benefits. It is expected that for the next two years, the Social Security will have to pay out more benefits than it collects in taxes. The deficits will be $10 Billions in 2010 and $9 Billions in 2011. Even though it will not affect the payments to retirees since the surpluses of Social Security is $2.5 Trillions from previous years, it will add to the overall federal deficit. According to the Social Security, the application for retirement benefits are as much as 23% higher than last year, and claims for disability also increased to 20% higher.
Furthermore, the high number of baby-boomers getting to their retirement plus the number of other unemployed people chosen to retire early have added up to a 19% jump in 2009. There are approximately 2.6 million people entering to the Social Security benefits this year in comparison to 2.2 people in 2008. Just during last August, the government has paid out $6 Billion in benefits more than it took in taxes.
Social Security officers commented that they have already had prediction on the high number of retirees due to the great number of baby-boomers, however they did not think it would be this high. The people who retire early have to cut out a big portion of their benefits. Many of whom do not have a choice since they lose their jobs and could not afford to raise a family. Some people tried to find another job but the current economy does not guarantee it.
Sources:
http://finance.yahoo.com/news/Job-losses-early-retirements-apf-161066651.html?x=0&.v=6
http://www.usatoday.com/news/nation/2009-10-01-social-security_N.htm?csp=34
http://www.msnbc.msn.com/id/33043206/ns/business-us_business/
http://www.washingtontimes.com/news/2009/sep/28/job-losses-hurt-social-security/
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