Monday Business News

Global economic slump affects
savings, pensions of US seniors
Agence France-Presse . Washington

US seniors are having to put off their golden years of retirement as the global economic slump affects their savings and pensions and the cost of living climbs.
At least seven in 10 Americans older than 45 expect they will have to continue to work beyond 65, the usual age of retirement, a study by the AARP, a huge lobbying and interest group for people over 50, showed Monday.
Most of them said they would have to continue to work because they will need the money or will need to support members of their family.
‘Not only those who are close to retirement are looking at their 401 K (pension fund) and recognising that they simply don’t have enough money to retire, but also those who are retired, are looking at their portfolios and recognising that, in fact, they may have to go back to work,’ AARP director of workforce issues Deborah Russel told AFP.
With the exception of a few professions, such as police officer or pilot, there is no obligatory retirement age in the United States.
‘In recent weeks, we’ve seen a huge surge in traffic on our website,’ said Tim Driver, director of Retirementjobs.com, which helps retirees find a job.
The site, which was created two years ago, has seen traffic double since the financial crisis hit the United States last month, and the huge increase in users ‘is almost entirely attributable to the downturn of the economy,’ said Driver.
‘Baby-boomers particularly are finding that they need to delay their retirement or come out of retirement to come back to work, in large part because of the decline in their assets,’ he said.
Currently some 16 per cent of Americans older than 65 are working, compared with 12 per cent at the end of the 1990s, according to data from the US Department of Labor.
In the 1950s, before the introduction of health insurance in the form of Medicare for US seniors, 26 per cent of older Americans worked beyond the usual retirement age, the data show.
With life expectancy getting ever longer and medical care more sophisticated, more and more retirees are expected to outlive their pension savings.
A study by auditors Ernst and Young showed that nearly two thirds of middle class retirees will run out of savings before they die, and advised that they rein back their outgoings to avoid falling into poverty.
Evelyn Thomson, 55, and her husband, 65, settled in Pikeville, Kentucky, to live out their retirement days.
But with the cost of living on the rise, the 2,500 dollars a month from her husband’s pension fund — built up during 38 years working at a large US automobile manufacturer — doesn’t go far and the couple has had to tighten their belts, and ride back out of the retirement sunset and into the workplace.
‘We don’t eat out, we don’t go anywhere, don’t do anything,’ Evelyn Thomson said.
‘My husband works full-time at Wal-Mart and it’s still very, very tight. I need to find a job and make as much as I can, but with everyone looking for work, that’s hard,’ said Thomson, a licensed social worker and substance abuse therapist.
Marylin Peabody of Billerica, Massachusetts, was laid off in June and is looking for a job as an accountant.
As the financial crash continues to sweep US and global stock markets — in which a large chunk of Americans’ retirement savings are invested — Peabody has watched helplessly as almost 10 per cent of her pension fund was wiped out.
‘My 401 K (retirement savings account) took a drop — I lost 5,000 dollars out of 60,000,’ she said.
‘I can’t afford not to work,’ the 55-year-old said.