The Homa Files

Excerpted from WSJ: “One in Five Baby Boomers Cuts Retirement Saving”, Oct. 7, 2008

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One in five middle-aged workers stopped contributing to their retirement plans in the last year, and one in three has considered delaying retirement … the latest evidence that the deteriorating economy and stock market are creating a less-than-golden outlook for the huge tide of baby-boom Americans surging into retirement age. This demographic, born between 1946 and 1964, numbers around 78 million.

About 60% of U.S. workers in the private sector have 401(k) accounts, holding about $3 trillion in assets. Surveys have shown workers don’t put enough into 401(k)s to support their retirements, even as such plans have become the main source of retirement support, surpassing traditional fixed-benefit pensions.

Labor Department statistics also show more Americans over 55 years old are staying in the work force, a sign that many can’t afford to stop working.

Most respondents believe they need to contribute more to their retirement accounts, but those who have stopped are “having trouble making ends meet for basic expenses like food, gas and utilities.”  More people (13%) have been pulling money out of their nest eggs before age 59-1/2, even though such withdrawals bring a tax penalty.

The poll was conducted … before the worst of the stock market’s recent swoon, when retirement accounts were heavily weighted toward stock mutual funds. The turmoil since then might have caused many investors to question the wisdom of plowing funds into investments.

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Full article:
http://online.wsj.com/article/SB122333045141409159.html

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This entry was posted on October 7, 2008 at 7:15 am and is filed under Retirement - Social Security. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.