One of the most assaulting effects of the recession has been the number of 'almost there' retirees who have been forced to stop working earlier than planned. As the United States continues to deal with their economic uncertainty, many people in the older age brackets that hold 20 and 30 years worth of work experience remain jobless as their professional industries simply are not hiring. With the high 9.5 per cent unemployment rate, recently extended social federal benefits as well as the usual unemployment insurance that is being paid out like clockwork, the country is already under tremendous financial strain. Factoring in the almost three million Americans who have been forced to apply for early retirement, this leaves the U.S. in a bit of an economically compromised position as it is currently experiencing reduced tax collections as people cannot afford to pay.
The Social Security Administration has seen a record amount of applications for benefits. They say that 2.74 million Americans have applied for Social Security in 2009 before their full retirement age, which is more than any other year in history. It just happens this record number of applications came the same year the retirement age was bumped up from 65 to 66, which means that most of the applicants are having to make ends meet on reduced benefits.
In 2008, 58 per cent of people who applied for early retirement benefits were men, compared to the current 72 per cent for 2009. An alarming increase for women was seen as well as 64.2 per cent filed in 2008 compared to 74.7 per cent in 2009. The Social Security Administration also pointed out that if people claimed full benefits at 66, they would get 75 per cent of the check if they applied four years early, but if they waited until they turned 70, they would be entitled to 32 per cent more. However, most have been forced to either apply early or, if they need more money than their checks, to continue working well beyond their retirement years to pay the bills.
The Social Security program also forecast that the program would return to the black, as benefit payments will exceed tax collections into 2015. They also point out that by 2015, they are expecting more than 78 million baby boomers to start retiring. With so little money coming in and so much going out, it's no wonder the country remains in such economic turmoil.
It may be a good idea for Canadians to take note of the current American situation and not allow our own financial circumstances to become inflated and out of control. Setting aside some money in an RRSP is simply smart and will leave you better prepared for the future.
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