Social Security--Retirement--Jobs--Entrepreneurship--Unemployment Statistics

Social Security, established to assure some income during retirement years, is becoming an even more important resource in this new economy.  Unemployment statistics are not very accurate.  Many people eligible for early retirement have found themselves out of work--many for more than a year.  More than that, most have exhausted their state's unemployment benefits and are still not finding jobs that paid the kind of salaries they were earning before they left their previous employment.

Many are becoming "semi-retired"--taking early retirement and continuing to look for work--or, more importantly, finally becoming entrepreneurs.  It appears that this may be becoming the norm.  The "new economy" and the new jobs do not appear to be helping people born between 1943 and 1960--the group of people eligible for early retirement at 62 and who attain "full retirement age" on their birthday at age 66.

A recent article from Abby M. Locke and  TheLadders.com was entitled, "Facing Age Discimination as Young as 40"  The article went on to talk about the difficulty in "the new economy" for people 40 and above to find the kinds of jobs they are looking for.

Many in the 40+ age group have advanced degrees and have held high-paying positions in the job market.  Unfortunately, many may have expenses that match the income they are used to receiving.  It may take some time for adjustments to be made.

Social Security is designed to be flexible for early retirees who plan to continue bringing in income.  They have to report their income to Social Security and their benefits may be temporarily reduced when they earn over the limits set by Social Security until they reach "full retirement age."  In general, if there have been any benefit reductions due to earned income, those benefits will be restored after the person achieves full retirement age.

The good news for soon-to-be entrepreneurs is that Social Security will help cover expenses as we begin to grow our fledgling businesses.  We may need to take one or more contract, temporary, part-time, or lower-paying jobs than we are used to to bring in additional income and, depending on the economy and the areas we are focusing on in our entrepreneurship, we can soon be generating quality and sustaining income for our years of "semi-retirement."

Social Security, FDIC, The New Economy, Baby Boomers, It's A Wonderful Life Movie

One of my favorite movies, especially at Christmas, is Frank Capra's It's A Wonderful Life with Jimmy Stewart and Donna Reed.  In 2003 I taught economics to English language learners (ELLs) at a high school in Elgin, Illinois, and we watched It's A Wonderful Life for almost two weeks.  The movie shows various times in American history--the end of World War I, the Great Depression, runs on banks, World War II, and life in small town America.  The Federal Deposit Insurance Corporation (FDIC), an independent organization, was created by the U.S. Congress in 1933 "in response to the thousands of bank failures that occurred in the 1920s and early 1930s."  (Source:  http://www.FDIC.gov)  The movie also featured the role of the Savings and Loan institutions and their relationships with banks.  This relationship played out in 2009 when Washington Mutual was purchased by J.P. Morgan Chase. 

The Social Security Administration was also started after World War II.  Baby Boomers (babies born between 1944 and 1960) are a large demographic unit and have contributed money all of their working lives to the Social Security trust fund.  Fewer workers will be paying into the fund when the baby boomers retire--as many are starting to do now.  Congress has tapped into this fund and has drawn down its reserves.  There is concern that Social Security funding will be tapped-out by 1937--according to a media report I heard last month on ABC.

In the new economy ("after the great recession" [AGR]), baby boomers turning 62 are finding it difficult to keep or to find jobs that pay the salaries they need to pay mortgages, car payments, insurance, etc.  Many companies, while not claiming to discriminate against baby boomers, are offering salaries that are half or less of what baby boomers were getting for the same or similar jobs a few years ago.  Others are requiring specialty skills or training or experience that came after baby boomers earned their degrees.

Taking Social Security early results in a lower monthly payment--with everything adjusted based on individual contributions to social security.  People under full retirement age (66 for many baby boomers) may earn $14,140 per year before having their social security income adjusted.  If they earn more, any adjustments may come back to them when their social security benefits are reconfigured at full retirement age.

The point is this, by taking early retirement (social security) and working, baby boomers may be able to take jobs that pay half as much as they were used to because, with the social security income, they can still pay their bills.  When they reach full retirement age, they can earn as much as they want without a negative impact on social security benefits.

Double check everything in this post with Social Security.  It is as accurate as I can make it as of the date of posting.

Early Retirement Plus Working?

In this economy I need to make a decision in the next few days whether or not to apply early for Social Security benefits in the USA.  I do not reach full retirement age for 2.5 years, so I would have a smaller benefit amount each month.  The benefits would be recalculated when I reach retirement age and, if I keep working on jobs that pay into social security (as opposed to teaching jobs in IL and to other jobs that do not pay social security) I could end up with a bigger benefit than if I just wait until later.  The difference between what I would earn at full retirement age and what I would earn now is about $300 per month--significant for a long-term view.

At the same time, while I am actively working three businesses and pursuing clients and customers, having a steady flow of income while I build more business--or take-on some contract or other part-time work--would do wonders for my "security" and sense of well being.

It takes a month for the process to start, so, if I plan to do something soon, I will need to act in the next day or so.  I will then have to make estimated tax payments for social security income, so I'll be back to Quicken before I know it.