Falling home prices, financial market losses, and layoffs have come at the worst possible time for workers on the verge of retirement. But the recession is also eroding retirement security in smaller ways that can add up.
Many Americans between the ages of 45 and 64 have escaped layoffs only to have their work hours or pay cut (30 percent), according to a recent AARP survey of 939 adults age 45 and older. In an effort to bolster shrinking paychecks, some workers have stopped contributing to 401(k)s, IRAs, and other investments (29 percent) and are even prematurely withdrawing funds from these accounts (18 percent). "The 45 to 64 population is particularly squeezed,” says Nancy LeaMond, executive vice president of AARP. “They are often trying to take care of the basic needs of their aging parents and their children, and they don't have the ability in this economy to focus on their own financial and retirement security.”
Higher health costs are also taking a bite out of paychecks for workers age 45 to 64. While only 9 percent say they have lost their health insurance coverage, 22 percent have faced increases in the amount their employer or insurer asks them to pay out of pocket at a time other than the open enrollment period and 27 percent have had problems paying medical bills. To save on healthcare expenses, some older workers have postponed necessary medical or dental work (24 percent) or not filled a prescription, cut pills in half, or skipped doses (23 percent).
To stretch their remaining income, some Americans have cut back on driving to reduce gasoline costs (57 percent) and discontinued a gym membership (14 percent). About 12 percent of baby boomers have looked for more affordable housing and 34 percent have made household improvements to stay in their current home longer. Some families also seem to be coping with the recession by sharing living quarters with their extended family. About 5 percent of baby boomers between the ages of 45 and 64 have had their parents move in with them and 27 percent say an adult child shares their home. Another 4 percent of the older workers say they have moved in with their adult children or parents.