Social Security's Newest Problem Is Catching Older Americans Off Guard

As older Americans increasingly leave the workforce because they can't find work, their retirement savings are stretched thin. Many older adults don't leave the workforce by choice, and these early workforce exits are causing trouble for the Social Security program's revenue.

Here's what to know about how this issue might affect your employment as an older adult and the impact it might have on your Social Security benefits.

Why older Americans are leaving the workforce

Early workforce exits are often regarded as voluntary retirement, but for many workers, the weak job market is actually forcing their exit from the workforce. According to Labor Department data, approximately 1 million workers have left the workforce over the past year. That includes 720,000 workers who left the workforce in June alone. Overall participation in the workforce is currently at the lowest point in decades (outside of the pandemic).

Hiring has largely been concentrated in a few sectors like health care, making it particularly difficult for older job seekers to find new employment opportunities. Some of the part-time jobs that were attractive to retirees have been replaced by technology, or the positions have been filled by younger workers. The job search may be so difficult that some older adults ultimately give up and retire early, even though they don't actually want to.

Age discrimination in the workforce

Older adults also face the persistent challenge of age bias and discrimination. A survey by AARP Research found that many workers aged 50 and older feel that they're being pushed out of their jobs. Of the survey respondents, 22% felt they were being pushed out of work, and 64% reported seeing or experiencing age discrimination in the workplace.

Age bias may take on many forms, including assuming that older adults are less tech-savvy, assuming they are resistant to change, and giving preference to younger employees for training. Such biases may make staying employed or gaining new employment extra challenging for older adults, potentially resulting in early workforce exits.

The opportunity that willingness to work presents to employers

A 2025 Northwestern Mutual report indicated that more than half of Generation X individuals don't feel that they have saved enough money to be able to afford retiring at age 65. As a result, many older adults are trying to stay in their positions as long as possible in a phenomenon known as "job hugging."

That commitment to their jobs offers employers an advantage. Hiring and training workers is expensive, but older, existing employees who are willing to stay longer may help employers save money, since they don't have to train new employees.

The fact that many older adults aren't financially prepared for retirement also highlights the substantial impact that a job loss may have later on in life. If these individuals need to work but lose their jobs, they may have a difficult time finding new employment, leading to financial strain.

How early workforce exits impact the Social Security program

As workers retire early, they're impacting the Social Security program. Since Social Security is partially funded by payroll tax contributions, every worker who retires early reduces the program's revenue. When workers retire years early, the program loses out on years of tax revenue.

With fewer older adults in the workforce, the ratio of workers to beneficiaries supported by the program also changes. With fewer workers paying taxes to support beneficiaries, there's increased financial strain on the Social Security program. Plus, workers who retire early start claiming Social Security benefits earlier, further drawing down the program's funds.

Social Security's approaching insolvency

Reduced revenue may contribute to the Social Security program's approaching insolvency. According to the Trustees of the Social Security and Medicare trust funds 2026 report, the Social Security trust fund may be depleted by the fourth quarter of 2032. That's one quarter earlier than the trustees projected in 2025. When the fund becomes depleted, the revenue generated by payroll taxes may only be sufficient to cover 78% of scheduled benefits, resulting in automatic benefits reductions.

If older adults retire early because they can't find work, they may become increasingly dependent on Social Security benefits. If those benefits are reduced, these adults might be in an increasingly vulnerable financial position.

What happens when older adults claim Social Security benefits early

When older adults claim Social Security benefits early, they receive permanently smaller checks. When an older adult claims benefits at age 62, their benefits are smaller than if they waited to claim until the full retirement age of 67.

The reduced benefit size partially helps offset the impact that early retirees have on the Social Security program, but as large numbers of older adults retire early, the lost payroll tax revenue may have a significant impact on the program and may still leave it worse off in the end.

Bottom line

If you're nearing retirement, don't let a tough job market alone push you into claiming Social Security benefits early without running the numbers first. Permanently smaller checks may make it difficult to get by in retirement, especially if other sources of income, like savings and retirement accounts, aren't sufficient to cover your essential expenses.

Before you decide to retire, carefully run your numbers with SSA's benefit estimators or with the help of a financial professional to check up on your retirement readiness.

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Author Details

Josh Koebert

Josh Koebert has spent more than 16 years digging into the data behind how Americans earn, save, and retire. As a senior content marketer at FinanceBuzz, his work covers both ends of that challenge: the job market and real estate pressures that shape how much people can save, and the Social Security policies, 401(k) strategies, and retirement income gaps that determine what they'll actually have when they get there.