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Recession Prompts Older Americans to Put Retirement Plans on Hold

John Krivak

John Krivak, 56, a librarian in Hyattsville, says he is planning to work until his 70s to have more money for retirement. (Photo by Maryland Newsline's Hannah Kim)

Related Links:

"Older Americans in the Recession: More Are Staying in the Workforce, More Are Losing Their Jobs," a February report from the Economic Policy Institute (.pdf file)

"Labor Market Has Worst Month Since Recession Began," a February report from the Economic Policy Institute

The Economic Slowdown's Impact on Middle-Aged and Older Americans," a 2008 AARP report

Special Report Main Page

By Hannah Kim
Maryland Newsline
Tuesday, April 21, 2009

COLLEGE PARK, Md. - The number of older Americans delaying retirement has increased rapidly since the recession began a year ago to a level not seen in more than 40 years, according to the Economic Policy Institute. 

A report released in February by the institute shows that the number of people 55 and older who were working or looking for work had climbed to 39.8 percent -- the highest level since 1964 -- while percentages dropped for younger age groups.

Many older Americans were delaying retirement due to rising health care costs and losses in home values and retirement accounts, said Heidi Shierholz, an economist at the institute. 

“They’re just not leaving the labor force in the same kind of numbers that other workers are,” Shierholz said.

According to the report, the increased labor force participation by older workers, equivalent to 1.4 million additional people over one year, suggests that the recession gave them an added incentive to stay in their jobs or return to work.

A report published last May by the AARP highlighted similar trends. Of the 45- to 54 year-olds surveyed in that report, 24 percent were delaying their retirement and 19 percent of 55- to 64 year-olds were doing so.

Jason Saunders, a 28-year-old certified financial planner with The Family Firm in Bethesda, Md., said more of his older clients have been calling and seeing him more frequently to make sure they will be financially secure during their retirement.

Saunders said many of his clients were planning to retire in their early 60s but are now delaying their retirement until their 70s.

“It’s about trade-offs. People are not willing to cut back on their standard of living [because of their losses] and ... are willing to work a few years longer,” Saunders said.

According to Reuters, the Dow Jones Industrial Average Index dropped 50 percent in value in February when it closed at 7,062 points –down from 14,164.5 points in October 2007. 

The decline is comparable to the stock market’s drop during The Great Depression, when it fell 53 percent between September 1929 and March 1931.

John Krivak, 56, of Takoma Park, is one of the middle-aged in Maryland planning to delay retirement.

Krivak said in a recent interview he will have worked at the Hyattsville branch of the Prince George’s County Memorial Library System for 36 years by this summer. Although he would be eligible for retirement then, he said, he doesn’t see himself retiring until he’s in his 70s.

“I’m in a really old-fashioned retirement plan, that the more years that I work, the higher the defined benefits go up,” Krivak said. For “every additional year that I work beyond 30 years, my pension gets closer and closer to my average three-year final salary.”

Krivak said it was always his plan to work into his 70s to keep healthy and active. However, he said his pension and investment accounts have taken huge hits as his mutual funds declined in value due to the financial crisis.

Bill Auchter, 61, of Hyattsville, Md., said it’s “the worst that I’ve seen the economy.”

Auchter said he works at a transportation company that laid off 30 people last month.  He’s lost money in his retirement funds, he said, and has been saving money by dining out and driving less.

"I will be delaying retirement because of the economy... it could be five years from now, or it could be 10. I don't feel like retiring right now, and the economy is not conducive for it," he said.

Auchter said he sees himself opening a bar in the future, a goal he said he always wanted to pursue.

“My heart is good, so I could do whatever I want,” he said.

Copyright 2009 University of Maryland Philip Merrill College of Journalism

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