As the falling real-estate and stock markets erode their savings, many people are delaying retirement, electing labour over leisure in uncertain times.
Millions of people of retirement-age stung by the recent economic pall, suddenly are having to reassess their plans – with many forced to quickly change course.
In February, the proportion of people ages 55 to 64 in the work force rose to 64.8 per cent, up 1.5 percentage points from last April. That translates to more than an additional million people in the job pool, according to the U.S. Labour Department. The ranks of those 65 and over in the work force rose to 16.2 percent from 16 percent in the same time span – meaning 212,000 more hands on deck. So far, the numbers for March continue to show a ”sharp” increase, says Steve Hipple, a department economist.
While many Americans are still sitting on large gains from homes and stocks bought years ago, today’s market turmoil is shaping up to be the most painful in decades. Nationally, house prices have fallen 10 percent or so in the past year. And the quarter ended Monday marked the worst period for stocks in 5 1/2 years, with equities off 15.5 percent from their October highs.
The double dip, affecting asset owners of every age bracket, is unprecedented in recent decades. In 1987, property and market values dropped in tandem – but nowhere near the extent to what’s happening now. To document similar conditions, ”you’d have to go back to the era of the (Great) Depression,” says financial historian Richard Sylla of New York University’s Stern School of Business.
With their homes worth less, fewer people feel confident enough to retire, even if they plan to continue living in them. And unlike younger workers, they don’t have years to make up for downturns in the stock market. As a result, they worry that their investments will diminish to the point that they won’t have enough money to get through retirement.