With the recession squeezing wages and holding back stock prices, millions of Americans are being forced to rethink their plans for retirement, according to a new survey.
Watson Wyatt Worldwide Inc., a retirement consulting firm, has released a survey showing that in the past year, 44 percent of workers age 50 or older have had to delay their planned retirement date. Three-quarters of those now planning to postpone retirement cite the loss of savings in their 401(k) accounts as the single biggest reason, the survey showed. The respondents also said they need to work longer because of rising health care costs and fears about price inflation.
If Americans do keep working longer, it would reverse a decades-long trend toward earlier retirement. The U.S. Bureau of Labor Statistics says the average age for men at retirement in the early 1950s was just under 67. That age fell continually until it hit 62 in the late 1990s.
The survey of 2,200 full-time workers suggests the recession, stock market crash and drop in home values could dramatically reverse the early retirement trend. Half of workers over age 50 now say they plan to retire at age 66 or later.
"The economic crisis has affected many workers' retirement plans and nest eggs, but those nearest to retirement have been especially hard hit," David Speier, senior retirement consultant at Watson Wyatt, said in a written analysis of the data. "Older workers do not have the time to offset declining retirement account values, either by recouping their investment losses or significantly increasing their savings rate. For many, the only choice is to delay retirement."
A Federal Reserve survey in 2007 found that the median household in the pre-retirement age group — ages 55 to 64 — had total financial assets of more than $72,000. Based on the stock market's performance over the past two years, those savings would have been whittled down to $55,000.
Such losses appear to be spurring more Americans to save. On Friday, the Commerce Department said the savings rate spiked to 6.9 percent in May, up from 5.6 percent the previous month. That's the highest savings level in 15 years.