Why Social Safety retirement claims haven’t surged amid Covid-19


A social security administration office in San Francisco.

Getty Images

One of the most immediate effects of the start of the Covid-19 outbreak early last year has been a change in the workforce.

Now, almost two years later, data suggests that only a cohort of older workers has accelerated their retirement plans – those aged 70 and over.

As a result, social security pension utilization has likely seen “only a small increase” due to the pandemic, according to a study by the Center for Retirement Research at Boston College, based on data from the latest US Census Bureau population survey.

More from Advisor Insight:

Here’s a look at other stories that are affecting the financial advisor business.

Undoubtedly, the pandemic has caused many workers aged 55 and over to leave the workforce. The data show that the likelihood that this age cohort will leave the labor force has increased by 50% or 7.6 percentage points compared to the pre-pandemic rate.

Some of the most vulnerable to career break have included women, Americans of Asian descent, people without college degrees, and professionals who work in positions where they cannot work remotely.

However, the departure of older workers did not necessarily indicate retirement, as the data show.

The average pre-pandemic pension rate is 12.2% compared to 13.3% post-pandemic. “This difference of 1 percentage point is statistically significant, but qualitatively low,” according to the center’s report.

However, a certain group – workers aged 70 and over – were 5.9 percentage points more likely to leave their positions and retire during the pandemic.

The social security benefits are structured in such a way that the longer the beneficiaries wait to apply for pension benefits, the higher the monthly pension checks. But that stops at 70.

As a result, most older workers who have chosen to retire are likely to have taken their retirement benefits before the pandemic, according to the study.

How these pension trends evolve depends on how conditions evolve over time, according to the study. Some older workers may be waiting for their Covid-19 problems and restrictions to be relaxed before going back to work.

Others may not plan to return to work but may postpone social security entitlement due to other income from stimulus payments and unemployment insurance.

You might also like

Leave A Reply

Your email address will not be published.