January 21, 2022

Has COVID Changed Employees’ Social Security Claims?

Before COVID, more people were working longer and later taking advantage of Social Security to improve their prospects of a safe retirement. New research looks at whether the pandemic affected these patterns.

To provide a benchmark for answering this question, the short—How has COVID-19 affected the employment rate of older workers?— by researchers at the Center for Retirement Research (CRR) uses the Current Population Survey (CPS) to compare pre- and post-pandemic patterns of leaving work and retiring for individuals 55 and older.

Indeed, according to the research, the pandemic has led to the departure of many older workers, particularly those with less than college degrees, women, Asian Americans, and those whose occupations did not lend themselves to remote work. While the pandemic has pushed many older adults out of work, it had little impact on pension and Social Security claims, suggesting that many may want to return to work if the pandemic continues to abate, the researchers found.

“For those 55 and older, leaving the workforce is usually accompanied by a decision to retire voluntarily or involuntarily. But the pandemic was not associated with a large increase in the proportion of older people reporting that they are out of the labor market due to retirement,” write Laura Quinby, Matthew Rutledge and Gal Wettstein of the CRR.

In fact, they note that the trend is largely flat. The average retirement rate before the pandemic (through March 2020) was 12%, compared to 13% after the pandemic. And while that 1 percentage point difference is statistically significant, the letter notes that it is qualitatively small.

With one exception — workers age 70 and older — no specific group saw a statistically significant increase in their likelihood of retirement. According to the briefing, this oldest group of workers was 5.9 percentage points more likely to leave work and retire during the pandemic.

Consequently, the modest increase in self-reported retirement suggests that Social Security claims may not have increased during the pandemic. Most workers over the age of 70 likely filed a claim before the pandemic, as the Social Security actuarial adjustment does not reward workers for delaying a claim after 70, the letter explains. In fact, the monthly Social Security retirement benefit claim rate remained constant between April 2019 and June 2021.

Leave work

Nevertheless, the researchers found that the proportion of workers leaving employment changed greatly with the outbreak of the pandemic. Before the outbreak, about 15% of older workers would leave within a year, but this percentage rose sharply to 31.5% in April 2020.

A lower percentage of older people left in the months that followed, but the percentage remained close to or above 20% for the rest of 2020, it is further noted. Overall, the proportion of people aged 55 or older who left the workforce during the pandemic has increased by a statistically significant 7.6 percentage points.

Still, the researchers note that, as suggested by some previous studies, age was not a significant predictor. Employees aged 60-64 (as well as 65-69) were no more likely to leave their job than employees aged 55-59, after adjusting for other characteristics. For example, pre-COVID, the probability of retirement increased with age: 10% left aged 55-59, but 25% left aged 70 or older. Post-COVID, most age groups saw a consistent 7 percentage point increase in the proportion of individuals leaving work.

In contrast, the effect of COVID in women was slightly greater. In this case, the researchers found that women were two percentage points more likely to leave work. Most racial groups also saw increases of 7 to 8 points, but the increase among Asian Americans was 13 points.

Meanwhile, college graduates saw only a five-point increase, while those with a high school diploma or less saw a 10-point increase. Not surprisingly, there is a big difference between people with jobs that do and don’t lend themselves to remote work.

In a concluding observation, the CRR researchers note that the discrepancy between leaving work and retiring can be interpreted in two ways: some older people may plan to return to work as the pandemic continues to abate, and vaccination and other medical advances make doing so safer. “Others may not plan to return to the workforce, but use other sources of income — such as comprehensive unemployment insurance or federal incentive payments — to delay claiming Social Security,” write Quinby, Rutledge and Wettstein.

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