An alarming Los Angeles Times report that the US Social Security system is reporting a major surge in early retirement claims from laid off workers. It's up 25% ahead of last year. Clearly, laid-off workers are claiming Social Security early. Despite reduced benefits, they need to do it because they are under such immense financial pressure.

As Jonathan Chevreau says in the National Post says, there is a pretty compelling economic argument for people to go down this course. He writes: "Some financial planners argue it makes sense to take early benefits anyway, even if reduced, particularly if you can invest the benefits and grow your nestegg. Those five years of extra benefits can add up to a hefty sum and it's estimated that the "breakeven point" where the extra payments gained by postponement surpasses the foregone early cheques doesn't 't occur until one's late 70s or early 80s. So if you don't expect to live that long, it makes sense to go early. Another consideration is whether the plans will still be around by the time you plan to collect at the normal age. I'd call this the 'a bird in the hand is worth two in the bush' argument."

But the big question is who is going to pay for this? Ultimately, it puts the entire social security system under enormous pressure, pushing it to breaking point. As this report points out, the system only has so many reserves. Its trust funds are scheduled to run dry by 2037, which means people will be on severely reduced payments. And with the worst financial crisis since the Great Depression pushing US unemployment up to its highest level in 25 years, there is less payroll tax flowing into the system.

All this runs counter to another trend where those who can work, are choosing to stay longer and putting off their retirement. Indeed, some have argued that the concept of retirement is finished. It's an issue I examine in my Management Line blog here.

What's fascinating here is that economic forces seem to be derailing a long term trend. The result will be unsustainable and drain society's resources.