Oct. 2 (Bloomberg) -- Applications for Social Security benefits rose almost 50 percent more than expected this year because of the recession, according to the federal retirement program.

“We are seeing a significant increase in both retirement and disability applications as a result of the recession,” said Mark Lassiter, a Social Security spokesman.

The 150,000 extra retirees may add to the financial pressure on the entitlement program. In May, Social Security trustees said expenses would exceed revenue beginning in 2016, one year earlier than their previous forecast.

Former President George W. Bush sought unsuccessfully to overhaul the program by diverting some payroll taxes to private savings accounts. Lawrence Summers, an economic adviser to President Barack Obama, said in August the president would seek to ensure Americans can rely on the program as a base for building their “retirement security.”

The Social Security Administration had projected an increase of 315,000 applicants for the 12 months ending Sept. 30 partly because the first baby boomers -- those born right after World War II -- are starting to retire.

The actual increase was higher. Agency statistics show that 2.57 million people requested benefits, up from the 2.10 million applications received during the previous 12 months. That’s an increase of 465,000, or 47 percent higher than the expected rise.

‘Safety Net’

“People have always used early Social Security benefits as a safety net during recessions,” said Richard Johnson, a senior fellow with the Urban Institute, a Washington-based research organization. “We’ve seen that in past recessions and it looks like we’re seeing it again.”

Applications for Social Security disability payments rose 16 percent in the just-ended fiscal year, to 3 million from 2.6 million a year earlier, agency statistics show.

Many people with disabilities who had previously been able to work sought Social Security payments because they lost their jobs, said Paul Van de Water, a former Social Security Administration policy official. He is now a senior fellow at the Center for Budget and Policy Priorities, a Washington research group.

Likewise, many of those applying for retirement benefits are unlikely to find new employment and don’t plan to go to back to school to train for a new career, he said.

“Investing in additional education is less likely to be profitable when you’re 62 than 42,” Van de Water said. “The tendencies at that point are to apply for benefits because you’ve lost your primary source of income.”

Out of Money in 2037

Social Security trustees announced in May that the trust fund that pays for the program would run out of money in 2037, four years sooner than earlier projections. They said the fund would begin paying more money in benefits than it takes in from taxes in 2016, a year earlier than forecast.

Because those who start collecting Social Security at 62 get smaller monthly benefits than if they retired later, there may not be much of a long-term effect on the trust fund, said Dean Baker, co-director of the Washington-based Center for Economic and Policy Research. Most of those retiring early didn’t plan to work much longer, he said.

“It really will have very little impact,” Baker said.

Others disagree. Johnson of the Urban Institute said the earlier-than-expected retirements would mean less money going into the trust fund and more money going out.

“People aren’t paying taxes into the system” if they retire earlier than expected, Johnson said. “It is going to hurt the trust fund somewhat. We’ll see some acceleration of the date in which the trust fund is expected to run out of money.”

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

Last Updated: October 2, 2009 00:01 EDT