Slammed by the 2008 recession, a greater number of older Americans claimed Social Security benefits at a younger age and a shockingly large percentage exhausting their personal savings, a government report found.
Workers 55 and over who lost their jobs during the recession saw their length of unemployment almost triple that of before the recession, the Government Accountability Office reported. Since 2007, unemployment rates doubled and remained higher for people older than 55, it said.
When older Americans lose their jobs, they find it harder to get new positions because of a perceived lack of skills or health issues, and sometimes because employers want to hire younger workers, Barbara Bovbjerg, a managing director of the GAO, testified at a Senate subcommittee hearing.
Indeed, fully a quarter of adults 50 and older exhausted their savings during the economic downturn.
“The Great Recession has had a profound impact on older adults,” Ms. Bovbjerg said. “Many have lost employment and wealth, and they have little time to make up the difference before retirement.”
Those who were 62 when they lost their jobs could at least claim Social Security benefits, though they gave up 25% of their monthly benefits, compared with waiting until 66, Ms. Bovbjerg said.
“We have seen increased claiming at younger ages because of the recession,” she said.
The report found that about 30% of 62-year-olds began drawing Social Security retirement benefits in 2007. That amount increased to 35% in 2009 and 34% last year.
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Household income fell since 2007 by 6% for adults age 55 to 64, though it increased by 5% for those 65 and older. That increase is probably because of Social Security benefits, the report said.
With stocks and housing prices yet to recover, older Americans have had to reconsider when to retire and how much income they can expect to live on in their non-working years, the report said. In addition to taking Social Security benefits early, some older workers also delayed medical care or stopped saving altogether, the GAO said.
“Advisers serving older clients should be prepared to meet their unique financial needs and create an investment plan that addresses the sometimes difficult lifestyle and family issues this population must often tackle,” said Cathy Weatherford, president of the Insured Retirement Institute.
To ensure that their older clients are making informed decisions, many advisers follow up meetings with written summaries of decisions, and they send copies of correspondence to a family member, the report said.
“This is an important step in ensuring that these clients understand their investment goals and options,” Ms. Weatherford said.
An IRI study found that half those who will be between 60 and 65 this year think that they won't have enough money on which to live comfortably through retirement.
