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 work force.
"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."
But finding work has proved difficult.
The unemployment rate for older job seekers has more than doubled since 2007 to 7.2% 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 401k 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% 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 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.
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% surge in Social Security applications in fiscal 2009, higher than the 15% 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.
Checks are reduced by 20% to 30% for workers who claim benefits at age 62. Those who postpone retirement will see their checks increase by 7% to 8% for each year they delay between ages 62 and 70.
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.
Key calculation: How long will you live?If you reach the average life expectancy, it doesn't matter what age you are when you sign up for Social Security. Retirees who claim their due at 62 receive lower monthly payments for a longer time, while those who delay retirement have higher monthly payments condensed into fewer years. But individuals who live longer than average will come out behind if they claim early.
"The risk of taking up Social Security when you are young is you could lock yourself into a lifetime of relatively low retirement benefits," says Richard Johnson, a senior fellow at the Urban Institute. "That's something that could come back to haunt a retiree in their 70s and 80s when their out-of-pocket health care costs start going up and they might wish they had an extra $100 or $200 in benefits."
Jim Lord, 63, of Taunton, Mass., calculates that his break-even point is age 77. "If I live past 77, then I should have done it differently," he says. Lord, a former retail design consultant, originally wanted to retire at age 65 but signed up for Social Security in October 2008 after a layoff. "I didn't have any choice," he says. But Lord admits that he enjoys the extra time for golf and going to the gym.
Retirees who find work again can suspend their Social Security benefits or even repay all of the benefits received and restart their benefits at the higher rate.
"It's kind of an interest-free loan," says Reimringer, who plans to try to pay back the Social Security benefits he received and then reclaim at a higher rate at age 70 if he finds a full-time job.
"If you're strategic about it, you can use your Social Security benefits like unemployment insurance just to get you over the hump," says Wellesley's Levine. But, he cautions, "very few people who start claiming their Social Security benefits stop claiming them."
This safety net for seniors is a valuable source of emergency income that workers shuttled into an unplanned retirement before age 62 don't have.