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In the very recent past, I know many pre-retiree’s who laughingly exclaimed that they will become a WalMart greeter just to have something to do during retirement . They were pleased with their 401k Plans and IRA’s and were on cruise control towards their golden years.
As a result of the economic crisis of 2008 and 2009, this is no longer a joking matter, as 401k and IRA plans have been cut by 1/3, and many pre-retirees may need to secure a part time job in retirement.
According to SunLife Financial, 54% of American workers will delay their retirement by at least one year due to the current economic situation, with 24% saying they will need to work more than 5 years. The SunLife Index, released multiple times a year, gauges how economic, financial , and societal forces affect working Americans, and forecasts their future retirement decisions that will impact individuals, the government, employers and the broader economy.
Over the last 90 days, the most popular reason cited by American workers for why they would continue to work past the traditional retirement age of 67 shifted from “to stay mentally engaged” to “earn enough money to live well.” While staying mentally engaged fell to the second most popular reason, the number of Americans who cite they will continue working “for health care benefits” rose from the sixth primary reason to the third most common answer, with 64 percent now listing it as a reason to postpone retirement.
ADDITIONAL FINDINGSForty-something Americans deeply impacted by recession
The Index also reports the current economic environment has most deeply impacted the retirement mindset of Americans aged 40-49. Seventy-seven percent of them who plan to work past traditional retirement are doing so to receive health care benefits. This represents a 16 percent spike in just the last ninety days – far more than any other age group.
Forty-something Americans also led all demographics in expecting to work five years longer than planned (28%), saving or investing more in the last three months (40%), and continuing to work after 67 because of earning enough money to live well (87%).
How are Americans responding to the economic crisis?
Sixty seven percent of all Americans are now reducing their spending and over half (55%) are reducing their debt while far fewer Americans are trying to find a better paying job (22%). Of those trying to reduce spending:
75% are spending less on entertainment 74% are eating out less often 68% cut back on holiday gifts 53% put off a large purchase 37% cancelled planned travel or vacation 34% delayed a routine or elective medical procedureAmericans are not withdrawing retirement savings, even as confidence in government benefits continues to fall
Ninety percent of Americans have not had to withdraw any of their retirement savings from long-term investment products like IRAs, 401(k)s and annuities . Despite this positive note, confidence that government benefit programs like Social Security andMedicare will remain solvent continued falling, especially among workers in their thirties and forties. Seventy percent of workers in their thirties and 66% in their forties do not believe Social Security will be available when they are 67.eRollover believes that there may be more pain in the near future. Hopefully the massive government bill passed yesterday to pump “A Trillion” dollars into the economy will bear fruit. However, pre-retirees need to accept the harsh reality that they will have to either postpone or supplement their retirement as a result of the 2008 and 2009 Economies.
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