Recession Forces More Early Claimers to Use Social Security as “Income Insurance”

The Great Recession spurred an increase in the number of early Social Security claimers, many of whom are likely using the program as an “income-insurance” policy, says the Center for Retirement Research at Boston College in a July 2012 report.

The researchers looked at three possible scenarios: no recession, a minor recession, and a “great” recession, and found that compared to a less severe recession, 62-year-olds moved up their claiming age by about six months. Although claiming Social Security at the earliest age of eligibility may have helped those individuals out of financial straits, they ended up getting monthly benefits that were 5% less than what they would have gotten had their original claiming plans not been disrupted, says the CRR.  

By 2009, the number of early claims jumped about 5% to 42.4% of 62-year-olds, compared to 37.6% in 2007, before declining again as the economic recovery progressed.

The spike in early claims correlates with the rise in unemployment, says the CRR, noting that the impact of the unemployment rate on the probability of claiming at age 62 was roughly equivalent across all income levels.


Early claimers during the recovery period are more likely to be in poor health and are less likely to be working full-time or to have a defined benefit pension plan, say the Boston College researchers. However, they are more educated than those who claimed early during other points in the business cycle; early claimers during the 2001-2003 recession tend to have lower income, less wealth, and lower education levels.

“These simple characteristics suggest that those hardest hit by recessions are most likely to use Social Security as an income-insurance policy,” says the CRR. 

View the full report here.  

Written by Alyssa Gerace  

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