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The Great Recession - Older Workers May Never Recover Financially

  • Synopsis: Published: 2011-05-24 - Older Americans worried about their financial future and taking actions to rebuild some measure of retirement security. For further information pertaining to this article contact: AARP.

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AARP survey of 5000 older workers shows many may never recover financially from the great recession - AARP public policy institute sees retirement confidence eroded, leading to defensive actions.

Older Americans, emerging from the bruising experience of the recent recession, now generally lack confidence in their prospects for economic security in retirement. Whether working or not, they are worried about their financial future and taking actions to rebuild some measure of retirement security.

Those are the key findings of a new AARP Public Policy Institute report on a survey of more than 5,000 Americans - age 50 and over - who were employed, had been employed, or were seeking employment during the three year recessionary period before they were surveyed online last October.

"Many older Americans have been buffeted by skyrocketing health care costs, dwindling home values, shrinking pension and investment portfolios, and employment struggles," explained John Rother, AARP's Executive Vice President for Policy, Strategy and International Affairs. "Even if you have a job, this survey demonstrates that you are not immune to the negative effects of the recession."

IMPACT OF THE RECESSION ON RETIREMENT SECURITY

Among the survey's key findings:

One in four (24.7%) surveyed reported exhausting all savings during the recession. More than one in three who had difficulty making ends meet (36.4%) stopped or cut back on saving for retirement.

One in eight (12.4%) lost their health insurance. Almost half (49.5%) of those having problems taking care of financial needs delayed getting medical or dental care or stopped taking medications.

Of the nearly one in seven (13.5%) who started to collect Social Security retirement benefits, two-thirds (67%) of those did so earlier than they had previously planned.

"Older Americans have good reason to be worried about the future because they have less time than others to recover from the impact of the last three years," said Rother. "When older Americans are borrowing against their future or betting against their health, serious challenges lie ahead."

STEPS TAKEN TO ADDRESS RETIREMENT CONFIDENCE

The "Insight on the Issues" survey showed that more than half (52.6%) surveyed were not confident that they will have enough money to live comfortably in retirement. More than two in five (45.9%) of those surveyed anticipated a "less economically secure" retirement than their parents possibly due to lack of savings and increasing debt. The top two financial concerns respondents expressed about retirement were: retirement income may not keep up with inflation (44.8% very concerned), and not having enough money to pay for long-term care (44.3% very concerned).

As a result, more than half (54.8%) reported that they had changed their plans or taken steps to shore up their finances for retirement. Employment was a major focus for many: 44.1 percent said they would likely work part-time in retirement. One third (33.4%) said that they planned to delay retirement.

Paying down debt (38.7%), saving more (35.0%), shifting to less risky investments (35.4%) and focusing on paying off mortgage (22.5%) were some of the other actions cited to buttress their retirement security.

Looking broadly at the economy, the survey showed that 83.3 percent of the respondents said that they "thought that the nation's economic problems will make it harder for them to take care of their financial needs in retirement."

"This unprecedented economic recession has left a legacy of low confidence, lower savings and the lowest employment rates in decades," concluded Rother. "While we are hopeful about improving economic conditions, this survey reminds us that older Americans will feel the effects of the recession for years to come."

The new "Insight on the Issues" survey will be followed later in the year by a fuller "Beyond 50-2011" report that examines the recession experiences of jobseekers and retirees returning to the workforce in more detail.

AARP's efforts match the changing needs of its members and all older Americans with resources that can help them - today and in their communities - gain health and retirement security.

To find out if your plans are still on track to retire when - and how - you want, go to aarp.org/retirementcalculator. To find how the price and effectiveness of your prescription drugs compare to alternatives, and get tips on talking with your doctor of pharmacist, go to drugsavings.aarp.org/. To look for new opportunities to get back on the job, go to aarp.org/jobs.

About AARP - AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with over 35.1 million readers; AARP Bulletin, the go-to news source for AARP's millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

Related Information:

  1. Older Americans and the Recession
  2. Recession Impact on Lower-Income Adults
  3. Tips for Retirement Income Distribution Plan




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