As gas and grocery prices rise, some cash-strapped older workers are rethinking plans to retire. Some 27 percent of older workers say they are putting off retirement because of the recent economic slowdown, according to a recent AARP telephone survey of 1,002 workers over age 45. Almost 25 percent of people between the ages of 45 and 64 are taking money out of their 401(k)'s and other investments. And younger baby boomers between the ages of 45 and 54 say they are even postponing paying bills (27 percent) and cutting back on medications (17 percent).
"Taking money out of your retirement savings has a compounding effect, because that money is not allowed to grow at a time when you have fewer working years to replace the losses," says Tom Nelson, AARP's chief operating officer. "Even more troubling, shortchanging your healthcare can lead to higher healthcare costs down the road."
But for retirees already on fixed incomes, it's too late to change retirement plans short of re-entering the workforce. With each interest rate cut, retirees lose income on their savings in certificates of deposit and other interest-bearing accounts. Some 26 percent of retirees say falling interest rates have cut into their income. And nearly three quarters of respondents who own mutual funds, IRAs, or 401(k)'s say they have lost money, on paper at least, in the past 12 months as the stock market has declined.
Fixed incomes don't stretch, of course, when everyday expenses soar. Some 59 percent of those over age 65 say they're having a hard time paying for food, gas, and medicine. On top of that, fully a third of retirees say they have helped a child pay bills in the past year. About 11 percent of retirees report seeking help from loved ones or charity in the past year.
"Retirees and older Americans have had to deal with skyrocketing healthcare costs on fixed incomes for years," Nelson says. "For them, the current economic slump means more of the same."
Has this year been more of the same? Or do you think retirees have been hit especially hard by this economic slowdown?