For better-off Americans, the pandemic economy created some
of the strongest incentives to retire in modern history, with generous federal
stimulus, incredible market gains, skyrocketing home values and health concerns
drawing many Americans into early retirement.
The surprising twist? Many of these retirees also opted to
put off claiming Social Security benefits, an exclusive Washington Post
analysis shows. By delaying their benefits, these retirees can expect to
collect higher monthly checks in the future.
The number of workers applying for Social Security benefits
in the 12 months ending in September fell 5% from the same period a year
earlier, the biggest drop in almost two decades, according to the Social
During the same period, retirements among workers ages 65 to
69 were up 5%, according to a Washington Post analysis of Bureau of Labor
Statistics data. (It’s not clear how many of those who retired early delayed
Social Security benefits, as BLS doesn’t track such benefits in its monthly
America’s retiree population grew by about 3 million during
the pandemic, about double what would have been expected given pre-pandemic
trends, which has been previously reported. But the surprising surge in older
Americans delaying Social Security upon retirement is another example of a
number of unusual trends roiling the American labor market. Most notably,
workers of all ages are quitting jobs in record numbers, in what has been
dubbed the “Great Resignation.”
Economists, researchers and government officials attribute
the trend to generous federal stimulus and unemployment insurance payments that
enabled retirees to make ends meet in the short term; soaring stock and home
prices that fattened retirement accounts; and pandemic-related restrictions at
Social Security field offices nationwide that forced seniors to apply online.
“Usually in economic downturns, we see increased reliance on
Social Security programs, and thought that’s what was going to be coming with
the pandemic,” said Lauren Hersch Nicholas, an economist at the University of
Colorado at Denver who has studied the phenomenon. “The claiming numbers just
don’t show that at all.”
Social Security allows most people to enroll as early as age
62, but steadily increases monthly payments to those who enroll later, up to
age 70. Someone who turned 65 this year and last earned $60,000 could see their
monthly payment jump from $1,418 to $1,550, a 9% increase, by delaying their
retirement by a year, according to Social Security’s calculations.
Economist Courtney Coile of Wellesley College said the
unusual rise in retirements, especially among women, was probably driven by the
unprecedented nature of this crisis.
“Health concerns are unique to this recession and may be
playing a role, especially because workers ages 65 and above are less likely to
be able to telework than younger workers,” Coile said.
The coronavirus pandemic has made workplaces far more
dangerous for those who are older or in vulnerable health, prompting an unusual
wave of retirements among a population that has accrued a bit of a nest egg.
Fawn Michel, a certified public accountant living in Port
Orchard, retired in May at 62 but doesn’t plan to take Social Security until
she turns 70.
Early this year, she and her husband analyzed their
fast-growing portfolio and realized she didn’t have to keep working. As long as
they kept their expenses near their pandemic lows, she could afford to retire
without taking Social Security early. As her firm returned to the office, she
wouldn’t have to drive two-plus hours to work in a Seattle suburb each day,
then drive two-plus hours back each night.
“I just decided I’d had enough, you know?” Michel said,
adding that the pandemic had really changed her thinking on retirement. “When
you have friends and family dying from something like this, I’m thinking,
‘Well, you do this now, or maybe it’s never going to happen.'”
Experts have not yet settled on one easy explanation for why
people are retiring early and delaying Social Security, although they are
zeroing in on possible causes.
Some retirement experts, including those at the Social
Security Administration, point to the three federal stimulus payments and
expanded unemployment insurance during the pandemic, which have allowed some
seniors to make ends meet without taking Social Security, even if they had been
“Extended unemployment payments and pandemic relief payments
have contributed to lower benefit applications,” the Social Security
Administration’s Office of the Chief Actuary said as part of a longer statement
to The Post.
For example, Marilyn, who spoke about her employment
situation on the condition that her last name be withheld, said she had never
expected to be able to quit her job at age 65. But during the pandemic, she
paid off her car with stimulus checks and watched her nest egg grow as her
expenses plummeted. She no longer had to commute, eat out or buy work clothes.
She saved even more by growing her own corn, tomatoes, cabbage and kale in her
backyard garden in Laurel, Maryland.
In the coming years, she hopes to work part time and travel.
“I consider myself really fortunate, I really do,” said Marilyn, one of many
people who reached out to Post columnist Karla Miller after her columns on the
Nicholas, the Colorado economist, agreed, saying that extra
government benefits may have provided older Americans with a cushion to delay
taking Social Security in a time of extreme uncertainty and volatile markets.
“It may be that all of the stimulus benefits were effective
in keeping them from full-on deciding to claim benefits in the short term,”
Nicholas said. “There’s a lot of wait and see.”
In a recent working paper circulated by the National Bureau
of Economic Research, Nicholas and three collaborators found no relationship
between the number of Social Security retirements in an area and higher levels
of pandemic shutdowns or higher levels of in-person work. The team speculates
that national factors such as federal stimulus payments and reductions in
service at local Social Security offices could have played a role.
In a separate and ongoing research effort, Wellesley’s Coile
and Massachusetts Institute of Technology graduate student Haiyi Zhang set out
to understand how the pandemic changed retirement, and found themselves looking
to explain an early retirement wave. They found that workers were less likely
to retire if they could work from home. However, they didn’t see evidence that
local coronavirus outbreaks or the local job market had an effect on early
Economists also agreed that it wasn’t likely that COVID-19
deaths played a direct role in the drop in Social Security applications, even
though about 166,000 of the 737,000 Americans who have died of COVID-19 were
between the ages of 65 and 75, according to the Centers for Disease Control and
Prevention. Nicholas noted that COVID-19 tended to be most fatal to those who
were otherwise ill or in nursing homes — groups that were already likely to be
retired and collecting Social Security.
Many early retirees told The Post they were surprised this
year to see how much soaring stock and home prices had improved their financial
Since the pandemic began, the S&P 500 has offered
returns as high as 40%, depending on the dates used and whether dividends were
reinvested. Investors who entered the pandemic with a nest egg of about
$700,000 could have become millionaires — and that’s without considering
household equity in real estate. Home values also jumped more than 20% over
that same time period, according to Zillow. Markets such as Austin, Texas;
Boise, Idaho; and Kalispell, Montana, saw gains north of 50%.
More than half of Americans (54.5%) ages 55 to 64 have
retirement accounts and three-quarters (74.1%) own their home as of 2019, the
most recent date for which Federal Reserve data is available.
At age 62, Cheryl Miller now plans to retire from her job in
academic medicine in a matter of months, even though she won’t collect Social
Security for four more years. She is burned out at work and confident she’ll be
content with a modest lifestyle in her home in Hillsborough, North Carolina, a
small town in the forested hills a dozen miles northwest of Durham.
She sat down recently with her financial adviser to run the
numbers. Her portfolio was thriving, her older-model car was paid off and the
mortgage on her fast-appreciating home was affordable. If she kept her expenses
low and got insurance from a public health-care exchange, she could leave her
job and still make ends meet until she’d be eligible to collect full Social
Security at age 66 and 10 months. (For those born after 1959, full retirement
age is 67; those born earlier can collect a few months earlier.)
“It’s a short-term frugality strategy,” said Miller, who is
now delaying foreign travel, including a safari trip to Africa. “I will take
more road trips. The trip to Australia is going to be delayed. The money saved
by not doing a lot of traveling over the past year or two helps a lot.”
While it did not come up in The Post’s interviews with
retirees, Nicholas suggested that some may have put off filing for benefits
because their local Social Security office restricted in-person activities to
slow the spread of the coronavirus.
In addition to online and phone services, the Social
Security Administration operates more than 1,200 field offices, where Americans
can apply for benefits, get new Social Security cards or enroll in other
programs. During the pandemic, those offices have been limited in their
operations, with in-person appointments restricted to critical situations.
The Social Security Administration’s Office of the Chief
Actuary noted that field office closures “may not be a major factor” in holding
back applications because “online filing of the application is widely used by
Regardless of what is driving the trend, the delayed Social
Security wave signals an improving retirement situation for many Americans —
especially in the wake of a record-shattering economic crisis.
“This is a much better set of outcomes among older workers
than we were expecting when the pandemic was starting,” Nicholas said.
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