Baby Boomers Retirement Blues
Baby Boomers Retirement Blues
“Financial Crisis pulls billions from Pension Plans crimping consumer’s dreams and Corporate Profits,” says Mike Caggeso, Associate Editor, for Money Morning Online Investment News. Caggeso stated, “last year was a bad one for pension plans world wide, with the global financial crisis vacuuming an aggregate five trillion from company operated retirement plans in key markets as the United States, Japan, United Kingdom, and the Netherlands.”
“ As headlines from around the world remind us, this global retirement strategy is more than just government reports or statistics, this crisis has a very human face”, as stated by Caggeso. These retirement fund losses are personally affecting most people whom are looking forward to retirement. Working many years for a company that offered pension plans, and then the company finds a loophole and decides to increase a CEO’s pension and slash pensions for their employees. For most individuals lost retirement funds are especially painful, especially for consumers who have watched the value of their home drop, or a spouse has lost their job.
The Wall Street Journal stated that “a full one third of U.S. employers have reduced or eliminated their matching contributions to retirement accounts since January of last year and another twenty percent plan to do so before this year is over”, according to Spectrum Group, a retirement benefits consulting firm.
“Slashing retirement benefits are going to look like a smart management technique for staying competitive,” says Janice M. Nittoli, Associate Vice President of the Rockefeller Foundation, where she directs the campaign for American Workers. The problem with this is retirement payments that are not made in tough years while stocks are low, are never made up in the fatter years, when stocks are higher. Most Americans cannot afford to put away now, and as they age, have a high risk of falling into poverty. If we do not fund retirement plans during recessions, we will not heed the age-old advice to “buy low.” Instead, we will fund retirement plans only after stock prices increase with the return of a “bull market.”
One instance that is affecting the baby boomers from thinking about retirement; is the social security system rising the age for retirement. Plans to restore long- term solvency to the social security system include a proposal to raise the eligibility for full-retired workers benefits, known as the Normal Retirement Age (NRA). Until 2000, eligible workers could retire with full benefits at age sixty-five and reduced benefits at age sixty-two. “By accelerating the increase in the age of full social security benefits, so that it is fully in effect by two thousand sixteen, instead of two thousand twenty seven would eliminate an estimated five percent of the long-term social security deficit projected as of nineteen ninety eight”, according to the social security administration actuaries. (Social Security Advisory Board, 1998)
Social security reform plans would index increases in the retirement age to improvements in life expectancy, which at age sixty-five is more than five years longer than it was when the social security act was passed in nineteen thirty five. Increasing the age of eligibility for benefits is unpopular.
“There is some evidence that the trend towards earlier labor force exit has ended or even reversed in a number of countries.” (Organization for Economic Cooperation and Development, 2000) Most workers do not want to be told they must work longer to receive full-retired worker benefits, which in fact most Americans are unaware of them rising normal retirement age. Social Security Reform plans have recommended raising the full benefit retirement age beyond age sixty-seven. “A normal retirement age of seventy phased in by increasing the NRA one month every two years after the accelerated increase in the rise to sixty-seven, which would in turn eliminate twenty- two percent of the social security programs long range deficit”.(Social Security Advisory Board, 1998)
“Other studies show there are workers who plan to work at least part-time in retirement, primarily because they want to work or like what they are doing.” (AARP 2002) Boomers in particular are approaching conventional retirement age, better educated and in better health than older workers in previous decades; which would make them more interested in and capable of working longer.
Slowing labor force growth and labor shortages may cause more employees to attract and retain older workers with heightened awareness about rising life expectancy and concern about retirement income may prompt growing numbers of workers to postpone retirement. In other words, the Social Security retirement age increase being phased in may not itself be instrumental in keeping larger numbers of older workers in the labor force, but other developments could have a substantial impact, such as companies slashing pension plans.
By totoro in forum Ask a Teacher
Last Post: 27-Jun-2008, 04:36
By jedioliver in forum English Idioms and Sayings
Last Post: 13-Feb-2008, 15:03
By jiang in forum Ask a Teacher
Last Post: 06-May-2004, 01:28
Search Engine Optimization by vBSEO