Human Resources News & Insights

Retirement picture gets even bleaker for older workers

You know that more and more older employees are putting off retirement. Well, the situation’s getting worse.

A Conference Board study, entitled Trapped on the Worker Treadmill?, says that the number of employees between 45 and 60 who plan to hold off on their retirement plans has jumped 20% in two years — from 42% to 62%.

The study found that workers aged 45–60 who’ve experienced a job loss, salary cut or significant decline in home price are much more likely to have plans for delaying retirement.

But even those who’d not been significantly impacted by the recession are postponing retirement, the study found. The trend cut across all regional, ethnic, gender and income lines.

Savings levels ebbing

A major factor in the growth of their numbers, finds the report, is the continued depletion of savings. The recession officially ended in July 2009 and the stock market has rebounded strongly since then.

In 2012, however, 62% of 45- to 60-year-olds reported at least a 20% decline in the value of their financial assets since the start of the crisis — up from 42% in 2010.

Roughly half of the 21-percentage-point increase in plans to delay retirement between 2010 and 2012 can be accounted for by direct recessionary impacts —  job loss, salary reduction, depressed home prices and depleted savings, according to the report.

But there are other factors at work as well. Interest rates on savings accounts, CDs, government bonds and other funds have fallen significantly since 2010. With low yields expected to continue into the foreseeable future, workers may be pushing back retirement in anticipation of smaller returns on their financial assets.

Plus, the generation-long shift from defined-benefit to defined-contribution retirement plans — alongside changes in Social Security and the increasing scarcity of post-retirement employee health benefits — may be making working longer more important.

Finally, better health and life expectancy have, quite apart from the recession-related jump of recent years, pushed retirement age steadily higher since the 1990s, the Conference Board said.

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