It was good to see The New York Times publish the kind of story we have been urging—one that describes the struggles of seniors forced to take their Social Security benefits early, risking the quality of the rest of their lives. Since the Times often sets the standard that other outlets follow, its piece this week describing the financial plight of a 62-year-old woman forced to take early Social Security benefits deserves a tip of the hat. Human stories can clarify policy debates, and we hope there will be more like this one.
Clare Keany of Palm Springs, CA, lost her $64,000 job in 2008 as an administrative manager at a Santa Monica advertising agency when two of the firm’s big clients left the agency. As she searched fruitlessly for full-time work, her unemployment benefits dwindled to zero, and she turned to odd jobs to make ends meet while living off her 401(k) money and profit-sharing accounts. This year, with her savings gone, she took her early benefit from Social Security—a grand monthly sum of $1,082. As her other money disappeared, Keany became desperate and used the last of her savings to buy a tiny one-bedroom mobile home for $19,000 near friends in Palm Springs. Her Social Security check barely pays the $336 mobile home park fees, utilities, the cellphone bill, insurance, credit card debt, and a satellite dish. She says she has cut back on fruits and vegetables and could not afford to buy a new glass window that was damaged in a windstorm. She covered it with a tarp.
Times reporter Motoko Rich framed Keany’s predicament with nice context that placed her in the company of others taking early retirement benefits.The chief actuary for the Social Security Administration noted that about 200,000 more people applied for early benefits in 2009 and 2010 than the agency had predicted before the recession, and the trend, he said, continued.
The reason: Older people like Keany can’t find jobs. According to the Urban Institute, 37 percent of older workers who lost their jobs between 2008 and 2011 did not return to the workforce, claiming Social Security benefits at age 62. That, of course, is perilous, as Keany has learned.
Alicia Munnell, who heads the Center for Retirement Research at Boston College, told Rich “the most potent lever that individuals can pull in trying to get themselves a secure retirement income is to postpone claiming” benefits. Those taking benefits early find themselves with a benefit that’s 20 or 30 percent less than they would have gotten at their full retirement age. That age is now 66 and eventually rises to 67. Proposed changes to Social Security would move the age even higher. If the retirement age were raised to 70 as some suggest, workers who take a benefit at age 62—assuming the law would still allow that—would receive only about 57 percent of what they would receive at age 70.
Keany still hopes to find work, but in the meantime she holds two part-time jobs in gift shops on North Carolina’s Outer Banks, where she is staying for the summer with friends. She’s discouraged. “We’re already has-beens, which is so sad. Some of us are still pretty productive,” she said. People in her age group can expect to live on average another 23 years.
I wish, however, that Rich had pushed her piece a bit further—telling readers the amount Keany would have received had she been able to wait until her normal retirement age of 66 to receive full benefits.That would have better driven home the point.
Even better: It would have also been good to discuss how people like Keany would fare under various Social Security proposals that elites have been sending signals about, perhaps as part of a grand political bargain to be made after the election.
Keany is representative of all those Americans we’re told should work longer. But she shows what can happen when work is nowhere to be found. That’s rarely discussed in the often-exuberant press coverage about the virtues of raising the retirement age.