When precisely Social Security benefits trigger is pulled significantly affects your job search.
Anyone who’s lost a job knows how difficult it is to search for another one. For those who have gone through it at different points in the lives, it was easier to deal with at a younger age when you had your life ahead of you and parents or family members you could count on during the difficult time. You knew you could find a job and build a career without worrying how Social Security plays into it.
When it comes to older Americans looking for work, however, there’s little tolerance for the stress that comes with the task when they’re already winding down their careers. As a result, if they don’t find a job within a year, they’re likely to stop their search, according to Matthew Rutledge, a research economist for the Center for Retirement Research at Boston College.
The study shows that during a four-month period, 20 percent of older job seekers find employment, 19 percent can’t find a job and 61 percent stop searching, Rutledge says.
It’s been an historic period for older workers during the Great Recession that has seen the jobless rate for those 55 and older topping six percent for the first time since 1950, Rutledge says. The jobless rate peaked at 7.1 percent in August 2010, he says.
That comes on the heels of older workers participation in the workforce increasing since the mid-1990s, Rutledge says. The reason is the group sees that as the best solution to have enough income for their retirement, he says.
But during the Great Recession, more than half of all workers 62 and older and thus eligible for Social Security who lost their jobs left the labor force within nine months, Rutledge says. That’s a big contrast to those older workers not yet eligible for Social Security since less than 30 percent of that group leave the labor force, he says.
The ability to fall back on Social Security benefits and financial assets is likely to stop a search sooner, Rutledge says. That’s more important than labor market conditions when it comes to the duration of the job search, he says.
Rutledge says a study shows that of the factors of those stopping a work search after four months, Social Security led the way followed the pensions. If that wasn’t a factor, then it was health and work limitations.
Studies have shown women are more likely than men to exit the labor force to care for an ailing spouse, elderly parent or grandchild, Rutledge says. And those married to a non-working spouse tend to exit the search sooner because couples like to retire together, he says.
For all the trends taking place at this time, that won’t last, Rutledge says.
“Going forward, unemployed older workers will have less to fall back on, which should induce somewhat longer job searches,” Rutledge says. “Social Security benefits will replace a smaller share of pre-retirement earnings. Defined benefit pensions are all but extinct in the private sector and 401(k)s—which typically have only modest balances—are less likely to support a quick labor force exit. Older workers could also be healthier and less likely to have work-limiting conditions. Whether those changes result in a significant increase in job searches remains to be seen.”