Paul Skidmore is hesitant to call himself retired. The former insurance claims adjuster in Finksburg, Md., was laid off in February 2008 and has been job hunting for more than a year. Although at 62 Skidmore is old enough to begin drawing Social Security, he doesn't want to permanently leave the workforce. "On the one hand, my brain is telling me go look for a job," says Skidmore, who originally planned to retire at age 66. "On the other hand, why bother? Just retire."
Skidmore is among a growing number of people who want to work into their 60s but are pushed into early retirement by the weak job market. The number of unemployed Americans ages 55 and older expressing interest in finding a job has grown by 60 percent since the end of 2007, according to the Bureau of Labor Statistics. But finding work has proved difficult. The unemployment rate for older job seekers has more than doubled since 2007 to 7.2 percent in December 2009, and the average duration of the job search for older workers was 36 weeks in November—far longer than the 28 weeks most younger workers remain unemployed. Some discouraged seniors eventually give up on finding a new job and start calling themselves retired.
Many workers may want to delay retirement to replenish decimated 401(k) portfolios, but a larger number may be forced to retire early because of their inability to find new jobs, according to research by Wellesley College economists. The researchers estimate that 378,000 workers will be forced into early retirement in the next five years because of the rising unemployment rate, about 50 percent more people than those who will work longer to recoup stock market losses.
Mike Reimringer, 64, of Rochester, N.Y., once planned to retire at age 70, but he's now among the more than 1.3 million workers ages 55 and older who are employed part time because they have no choice. Two days a week, he works as a quality systems associate for a biological research company. "I am certainly hoping to get bumped up to full time, and I am continuing to job-search," says Reimringer, who was laid off from his last full-time job in December 2008. After a year of looking for full-time employment, he signed up for Social Security benefits in December 2009.
Filling the gap. Workers who are at least 62 when they lose their job have the option to sign up for Social Security benefits. The Social Security Administration reported a 21 percent surge in Social Security applications in fiscal year 2009, higher than the 15 percent jump that was expected as the oldest baby boomers reached retirement. The administration's chief actuary, Stephen Goss, attributes the rest of the increase to the weak job market. "This is a gap filler for those people until they can get back to work," he says. "If they don't get back to work, then these benefits will continue for the rest of their lives."
Social Security monthly payments are reduced when they're claimed early. "During the economic downturn, people do start retiring more, and they start doing that at exactly the age at which Social Security becomes available," says Phillip Levine, a Wellesley College economist. "But their Social Security benefits are less than they would have been otherwise." Checks are reduced by 20 to 30 percent for workers who claim benefits at age 62. Those who postpone retirement will see their checks increase by 7 to 8 percent for each year they delay between ages 62 and 70.
[Use our online tool to Find Your Best Place to Retire.]
Although Ellie Naill, 64, would have been eligible for $1,800 a month if she had waited until she turned 66 to claim her benefits, she currently receives just $1,500 each month because she signed up in May 2008—three years earlier than planned. "My husband and I are not making ends meet," says the former real estate agent in Cloverdale, Calif., who retired when her commissions stopped covering her expenses. "I either had to sign up for the money that we could get or we would already be out on the street." Naill now works part time in a fabric store for $10 an hour and is looking for full-time work. "I am cashing in part of my IRA to pay our bills for the next few months, hoping a job comes up," she says.