The Recession's Impact on Baby Boomer Retirement

Workers on the verge of retirement continue to be worse off than before the recession.


Few options to recoup losses. Individuals on the verge of retirement have little time to accumulate additional retirement savings. Older adults may have to reconsider when they retire or how much income they can expect in retirement. GAO reports that stocks, on average, have not fully recovered from their low point during the recession and housing prices have also not recuperated. "It used to be that your best retirement investment was your home," says Rich Morin, a senior editor for the Pew Research Center. "As people saw after the housing market collapsed, the value of their home deceased dramatically and so has their expectation of selling the house and moving to Florida and Arizona." The interest rates on savings and other FDIC-insured accounts now provides little or no interest income after adjusting for inflation.

[See 10 Ways the Recession Has Changed Retirement.]

Increasing reliance on Social Security. Social Security is the most common source of retirement income. Households with a member age 65 or older received an average of 65 percent of their retirement income from Social Security in 2008. But the recession may be causing many workers to sign up for Social Security benefits earlier than planned, which is resulting in them receiving smaller monthly checks. The proportion of adults who began drawing Social Security benefits at age 62 rose during the recession, from 30 percent in 2007 to 34 percent in 2010, according to a GAO analysis of Social Security Administration data. "More people claim at 62 than at any of the other ages," says Bovbjerg. "If you lose your job and you need money, you probably need to sign up at age 62. People who can't work longer are also going to claim benefits at 62." However, workers who began drawing benefits at age 62 during this period will permanently receive 25 percent less in monthly benefits than they would have if they waited until the full retirement age to sign up.

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