Many workers are being hit by large losses to their retirement funds. At the same time, a significant number of older workers are planning to delay their retirement. In fact, 60 percent of respondents to ASSEMBLY Magazine’s 2009State of the Professionsurvey have changed their retirement plans because of the economy.
State of the Profession
A recent survey conducted by Watson Wyatt Worldwide Inc. concurs with those findings. The consulting firm claims that 34 percent of all workers have increased their planned retirement age in the last 12 months. These changes are more pronounced for older workers. For instance, 43 percent of those aged 50 and over plan to delay their retirement, compared with only 25 percent of those under 40.
Three-quarters of older workers aged 50 to 64 cite the decline in the value of their 401(k) accounts as the most important reason why they are planning to postpone their retirement, followed by the high cost of health care (63 percent) and higher prices for basic necessities (62 percent). Of this group, more than half (54 percent) also indicate that they will work for at least three years longer than previously expected.
“The economic crisis has affected many workers’ retirement plans and nest eggs, but those nearest to retirement have been especially hard hit,” says David Speier, senior retirement consultant at Watson Wyatt. “Older workers do not have the time to offset declining retirement account values, either by recouping their investment losses or significantly increasing their savings rate.
“For many, the only choice is to delay retirement,” explains Speier. “Retirement programs are meant to assist with an orderly transition of a company’s workforce, but with older workers staying on the job longer, employers will be faced with challenges such as inflated benefit costs and hiring issues.”