Late-career Injuries Come at a Steep Cost

About one in four workers in their 50s and early 60s has a physical or medical condition that limits their ability to work. These impairments can upend retirement plans and force them to make financial sacrifices if they have to apply for disability or sign up early for Social Security.

A new research study that looks at four types of injuries – on- versus off-the-job and chronic versus less severe – confirms that they have a dramatic impact on older workers’ earnings and career paths.

Start with whether they can continue to work. Older workers who develop an impairment often leave their jobs immediately, regardless of the nature of the impairment, according to the study, which focused on people who have sustained their first work-limiting injury.

They don’t necessarily leave the labor force permanently. The researchers found that the decline in employment levels is much larger, and individuals stay out of work longer, if the injuries – whether on- or off-the job – persist for more than two years.  

Predictably, workers with these chronic workplace injuries lose earnings – $8,400, on average, in the year following the injury. While this group’s earnings do rebound, it takes years and some never return to their pre-injury levels. Less-severe work-related injuries that are more temporary in nature result in lost earnings of $6,100 and also take years to recover.

Older workers have more options for Social Security retirement or disability benefits than do workers in their prime. Their disability applications are more likely to be successful, and once they turn 62, they can sign up for their retirement benefits. And the researchers did find that about three out of four older workers with chronic injuries choose one of these routes. Over half with non-chronic injuries do.

But prematurely replacing a paycheck with a government benefit comes at a steep cost. Disability is somewhat easier for some people to qualify for after age 50 when the eligibility requirements ease up. But even if the applicant is successful, the benefit averages only $1,537 per month.

And while workers can start their retirement benefits at 62, claiming them prior to Social Security’s full retirement age – 66 for most boomers – means their monthly checks will be substantially smaller than if they wait.

Employers often try to accommodate injured workers so they can stay on the job, changing their job assignments or providing special equipment to compensate for a physical disability. These accommodations help to keep some employees on the job immediately after the injury. But injured workers who receive such accommodations are still less likely to be working than those who were never injured, the researchers find.

Social Security benefits soften the blow, but leaving a job prematurely jeopardizes older workers’ finances, leaving them “less financially prepared for retirement,” they said.  

To read this study by Erin Bronchetti and Melissa McInerney, see “Work-Related Injuries and Older Workers: Earnings, Labor Supply, Program Participation, and Retirement.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.