With the “Great Resignation” often permeating discussions about the state of the American workforce in the post-pandemic landscape, an analysis of data by the Boston College Center for Retirement Research (CRR) indicates that applications for Social Security have not commensurately risen with an increase in retirements. This is according to coverage at finance website the Motley Fool.
“Although a large share of baby boomers say they’ve retired since the start of the pandemic, applications for Social Security benefits have been fairly flat, according to the Boston College Center for Retirement Research,” the column reads. “Now one reason behind that trend could be that tech-phobic seniors may have opted to delay their claims due to not being able to file in person. The Social Security Administration closed its field offices in 2020 when the outbreak first erupted.”
There could be a larger reason this has played out, however, based on the general volatility being observed in financial markets due to both general pandemic insecurity and other persistent issues, such as inflation.
“Although the stock market had a strong couple of years, many investors may have gotten spooked by the brief bear market that ensued in the spring of 2020,” the column reads. “As such, they may have intentionally held off on claiming Social Security to avoid a reduction in benefits. Seniors are entitled to their full monthly Social Security benefit based on their earnings history at full retirement age (FRA), which kicks in at 66, 67, or somewhere in between. Those who retired before reaching FRA may have intentionally waited to file for benefits so as to not reduce a substantial income stream for life.”
Another reason could be that even though seniors have initiated their retirements, some of them may not necessarily see those retirements as permanent, the column says.
“In the wake of the pandemic, many companies have adopted more flexible work policies,” the column reads. “That could pave the way for older workers to explore partial retirement — an option that could make it possible to delay Social Security and grow their nest eggs rather than tap them.”
As many reverse mortgage professionals know, Social Security benefits are often insufficient if they are the only financial resource a senior has in retirement even considering the recent rise in the benefit. However, since the applications have been reasonably flat, that could also indicate that seniors may be doing better now, at least prior to the inflation spike currently being experienced.
“To be clear, Social Security isn’t a reliable enough retirement income source on its own. Benefits could be slashed down the line once the program’s trust funds are depleted, and many seniors can’t maintain the same standard of living they’re used to on Social Security alone without a backup income stream,” the column reads. “But even so, snagging a higher monthly benefit is a smart move on seniors’ part. And so the fact that Social Security claims didn’t jump during the pandemic is a sign that today’s retirees may not be in such bad shape, financially speaking.”
Read the column at the Motley Fool.