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U.S. retirement assets (defined contribution + defined benefit) tumbled 24 percent in 2008
While the economic crisis is being felt by nearly every segment of the working population, one group of workers is faced with particularly tough decisions regarding their futures. Sixty percent of workers over the age of 60 say they are putting off their retirement because of the impact of the financial crisis on their long-term savings, according to a survey by recruitment firm CareerBuilder. The survey was conducted among more than 8,000 full-time U.S. workers ages 18 and over between Nov. 12 and Dec. 1, 2008.
The findings are in line with a survey by NAVA (formerly the National Association for Variable Annuities), which found that more than half of all U.S. financial advisors indicate that their clients are changing or delaying their planned retirement age (see As 401(k) Accounts Take Hit, More Delay Retirement).
Depleted savings accounts attributable to the economic downshift are causing older workers to stay in the workforce longer to make up for their losses. One in 10 workers (11 percent) over the age of 60 who are putting off retirement say that the decrease to their savings might cause them to never retire, while 73 percent think it will take them up to six years of extra work to recoup their lost savings. Nearly a quarter (24 percent) feel they can make their money back by working an additional year or two.
-----------------------------------------------------73% think it will take them up to six years ofextra work to recoup their lost savings.-----------------------------------------------------
“Mature workers may be feeling the pinch of this difficult economy more than others because of their impending plans for retirement,” said Jason Ferrara, senior career advisor at CareerBuilder. “Mature workers who are returning to the workforce to offset their retirement losses will likely encounter many of the same challenges that workers of any age are facing today. However, their level of knowledge and experience and network of professional contacts will work to their advantage in a competitive job market.”
Plunging value of Retirement Accounts
Total U.S. retirement market assets, which include defined contribution 401(k)-type plans and defined benefit pension plans, lost nearly a quarter of their value, tumbling 24 percent to $7.86 trillion in 2008, down from $10.3 trillion the prior year, according to a report by Spectrem Group.
Assets held in defined contribution plans fell 21 percent in 2008 to $3.8 trillion, down from $4.8 trillion the year before. However, the popularity of these plans continued to increase overall, with defined contribution plans as a percentage of all retirement assets expanding to a record 49 percent in 2008.
"The retirement market took a significant hit in 2008, losing nearly a quarter of its value and undermining the retirement plans of millions of Americans. Defined contribution plans, which account for nearly half of all retirement assets and include 401(k)s, recorded a 21 percent overall decline," said George H. Walper, Jr., president of Spectrem Group.
In the corporate sector specifically, the value of 401(k) plans, which account for 71 percent of all corporate retirement assets, fell to $1.94 trillion in 2008 — a 23 percent decline from $2.52 trillion in 2007. However, over a longer period, average annual growth remained positive at 7.8 percent from 1995 to 2008.
The Spectrem report Retirement Market Insights 2009, is based on data from public and private sources as well as Spectrem surveys.
Stephen Miller is an online editor/manager for SHRM.
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