11/21/2011 3:18 PM ET|
Over 55 and desperate for work
Baby boomers who've seen their savings decimated aren't so much looking forward to retirement as trying to postpone it. For those without jobs, it's especially hard.
Fred Edgar, a 61-year-old unemployed product marketing manager, spends his days scouring the Internet and networking with former co-workers to find work. Laid off from Honeywell last October, the Dighton, Mass., resident needs to rebuild a retirement nest egg that lost more than 50% its value over the past four years. He's already pulled out $35,000 to keep himself afloat.
"All these things I planned for and paid into have taken a beating, and I'm worried there will be nothing there when I need it if I don't get hired soon," Edgar said. "It's not a place I thought I'd be at this point in my life. It's spooky."
Edgar isn't the only one spooked. Millions of aging baby boomers on the cusp of retirement not only lost their jobs in the Great Recession but also saw their savings eviscerated. Remaining in the labor force longer than planned is their only option for replenishing what they lost.
Yet workers in their late 50s and older face bleak job prospects. During previous downturns, unemployment among people 55 and older was lower than for other age groups, which some economists attributed to older workers' greater experience as well as union seniority rules. Earlier generations in this demographic group had compelling incentives to retire and not work, thus potentially lowering the unemployment rate. Mandatory retirement at age 65 or earlier was a given in most industries until age-discrimination laws were enacted. And, more important, when workers did approach retirement, they were confident that their defined-benefit pensions and Social Security benefits would suffice. Now, defined-benefit pensions have been replaced by less-secure 401k's, which fell prey to the 2008 stock market crash.
The shift from defined-benefit pension plans to defined-contribution plans encourages workers to continue working. Under a defined-contribution system, the longer a person works, the more he or she can save. Most pension plans, on the other hand, cap the payout after a person works a certain number of years. "Why would you want to tell someone, 'You worked 30 years . . . no matter what you do afterward it doesn't help your pension, so you might as well retire,'" asked James Sherk, a senior policy analyst in labor economics at the conservative Heritage Foundation.
The death of the gold-watch retirement
Unemployment at the peak of the current downturn for workers 55 and older, now 6.8%, was 40% higher than it was at the height of the last major recession in 1982, according to the Bureau of Labor Statistics.
One reason for the rise: A greater proportion of older workers has remained in the workforce. Early retirement -- once considered part of the American Dream -- is losing ground. The workforce participation rate for individuals 55 and older grew to 40.2% in 2010, up from 39.4% in 2008 and 29.4% in 1993, according to Census Bureau data. Relatively recent changes in Social Security law may account for the dramatic increase.
Since 1939, earnings-test laws have precluded people from collecting their maximum Social Security benefits if they earn more than a certain amount. In 2000, a law passed under President Bill Clinton removed limits on the amount people who had reached full retirement age -- then 65 and now 66 -- could earn before their Social Security checks were reduced. But the law left in place rules that workers ages 62 to 64 get their benefits reduced $1 for every $2 they earn above $14,160 a year.
The sharp decline in retirement assets from the 2007-08 stock market plunge has also contributed to older workers remaining in the job market. Defined-benefit pensions have gone from covering 80% of private-sector workers in 1985 to only 20% in 2008.
This growing desperation among older workers has given a boost to career coaches like Bruce Blackwell in White Plains, N.Y. He never saw 58-and-older workers five years ago, but now his business among that age group is thriving.
"People in that age group were either gainfully employed or, if not, often had the means to think about retiring before. But now I have plenty of people in their late 50s and early 60s knocking on my door," he said. "That age used to be a time where people could wind down their careers and enjoy the fruits of their labor if they wanted to. . . . Now they are fighting for work so that they can eventually enjoy financial stability."
There is at least one bright side to older workers remaining on the market, analysts said. It should reduce the total cost their retirement poses for employers and the federal government.
"If you've got workers who are capable of working and providing value to the economy, it makes sense to have the system set up so that they're not discouraged from doing that," said Heritage's Sherk.
But that's scant solace to aging baby boomers who lost their jobs and can't find new ones. The average duration of unemployment was 52.9 weeks in October for workers ages 55 and over, compared with 37.3 weeks for workers under 55, according to the Bureau of Labor Statistics.
Of course, unemployed older workers have always faced difficulty in the job market because they have higher salary expectations and employers are reluctant to hire job candidates they consider overqualified for lower-paying work. But now older workers face another hurdle: competition from other boomers.
Straining retirement plans and federal aid
"In 1983, you used to have relatively fewer older workers, and a lot more younger workers," said Barry Hirsch, a labor economist at Georgia State University in Atlanta. "But today, the relative size of the older population is much higher, and the younger population much lower, so the demographics have deteriorated for older persons and improved for young people."
Another factor holding back older workers from finding new jobs is the rapidly shifting technological skills demanded by many new jobs, especially in the information technology sector. "I don't think Facebook is out there hiring tons of workers my age," said Hirsch, who is 62.
Some economists fear the economy, even after it recovers, will not generate enough new jobs for older workers, leaving large swaths of boomers with inadequate retirement savings. That could leave the federal government and society to pick up the pieces.
"Unemployment in your late 50s and early 60s could really erode people's future retirement security in an ugly way," said Richard W. Johnson, the director of the Urban Institute's retirement policy program. People in that situation often start dipping into their 401k's sooner than expected or begin collecting Social Security benefits at age 62, leaving them with monthly benefits 25% below what they would have had if they waited until age 66 to start collecting.
Johnson says a likely scenario 10 years down the road is more elderly people get added to Medicaid assistance rolls -- the programs that help seniors with incomes up to 150% of the poverty line pay for premiums and prescription drug costs. "As baby boomers get into their 70s and 80s, we know Medicare premiums will continue to rise. In the case of those who couldn't find work and retired early, Social Security benefits will be smaller, too. That, to me, is a recipe for more poverty, unpleasantness and increased government outlays," Johnson said.
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When one workes over 25 years on a job and then one day is told "you are no longer needed" it hurts deeply emotionally and financially. Kids today take that for granted and some employers are so cold hearted.
My husband was "laid-off "in early 09. He was 48. They only called back workers making $10 or less an hr for a short time(my husband made more than $10 an hr) The business went bankrupt within a year. He did work a couple of seasonal jobs while looking for full-time work. He applied for hundreds of jobs in person and over the Internet for the next 2 yrs. No one responded. . So one day I tweaked his resume. I removed all info that could give away his age....23 yrs at one job, 20 years and retired from the National Guard etc. Within less than 24 hrs he received a phone call to come in for an interview. The guy had him fill out different paperwork, watch a safety video, said he had contacted previous employers etc. Told my husband he would call him the following Monday with work. He never called.
We feel that even though my husband had the experience the employer was looking for...and more than the guy thought he had by the resume submitted, he wasn't hired because of his age once he met him in person.
I, know very well about this article.
In May I was laid off from my job and as I was told that I was let go, that your an excellent worker, but! So filed for U.I and it ran out so was forced to hit S.S. earlier than I wanted.
You look and apply for work but you know their not going to hire you because of your age!
Even though they say nothing about it, but it's the reason.... Yet these young punks that get in trouble and sit around all day and do nothing are still there.
I've busted my **** all my life for the day I could retire in dignity and have fun! Well I wasted my time! Should have had the fun all along the way.
I, even did a transfer from one location to another and that was a mistake. Was told they needed me in my area, only to be let go a year later.
Then you have problems with S.S. for filing, they act like it's their money. You can't get a true honest answer out of them for anything! Told by 4 different people, 4 different answers. They don't even know their own rules and regulations.
But what gets me is, that people state that older people are better workers, but they let the better worker go!
This country is so screwed up it isn't funny! Oh, then you pay into Medicare all these years, then when you file for it, they tell you it going to cost you $119 a month for medical. Why don't they tell you that before they take it out? Now that's $119 out of your S.S. check............They give you some and take some back! Anyway you look at it, your the loser.
Also when your single, your the first to be let go! Which isn't right. In the last 10 or better years I've lost more jobs over being too old, so no pension. But I've tried to stay working but can't find any.
Even all the greeter jobs at Wally World are taken and a waiting list..........
With any luck it will remain illegal, then seniors can make a decent income if they do not get caught.
I f you do get caught, 3 hots and a cot plus free medical care. A win-win situation.
As I read this article, I predicted this 15 years ago, but no one seemed to listen.
For as long as I worked, contributing 15% of wages (7.5% me, 7.5% my employer) to Social Security, usually maxing out in September every year until the 80's when I noticed that my and my peers wages were depressed, no wage increases but working longer hours and profit being up. I also had a Defined Benefit Pension that my employer, IBM, reminded me every year that the benefits were worth at least 15% a year, hence my wages for a similar job at a competitor were lower. I needed to THINK long term.
Well I noticed something happening besides the rare wage increases, maybe 2 to 3% below hte annual inflation (my wages were decreasing as a result of not being on par with inflation). Then IBM started changing the "Rules of my Pension payout", first the lowering of the percentage multiplier from 1.5% (other plans were 2%) times my final years average compensation, then they changed the method of determining the compensation factor, then they capped the maximum number of years from Unlimited to 30 years. The changes were not favorable to my long term estimated pension. The discussions with management and the Human Resources brochures that kept me working at IBM instead of a Competitor.
Unfortunately for me, I trusted the laws of our Congress, preventing IBM and any other Corporation from reducing my long term Pension Benefits, I had contributed to with reduced wages. I was wrong. Starting in the late 80's thru the 90's, when our country had 150,000 defined benefit pension plans, that shrunk in the same period to 50,000. The only ones that survived were the Union Protected, public employees, Retired Military, Retired Public Employees and of course, Congress.
How did this happen? How about Corporate theft with clever schemes to having the pension funds taken to fill the Executive Top Hat plans and Compensation? How about the incentive to use the pension funds as "vapor Profit" the bottom line, like IBM with $200 to $400 million annually? Reduced Revenue, laying off older workers to get to their pension maximization dollars, and still showing a Profit. How about Louis V Gerstner Jr who walked away with enough money, to join the "Forbes 400 club" of the Richest in America who have more wealth than 150 million Americans? All funded and taken from the "old Money" of the Defined Benefit Pension Plans. I and thousands of others at IBM contributed to our DB plans with reduced wages while IBM received tax breaks.
Sadly I am over 55 and unemployed because of no jobs. The job I had disappeared when the store burned down. I am a veteran, too, and it does not help. I am highly skilled at setting up networks with computers and repairing computers as well. I still cannot get a job. My unemployment has long since ran out. I have many skills. They don't want to hire anyone over 55.
You get the smiling face that stabs you in the back as soon as you leave the office.
Economically I was forced to retire early so I could care for my very ill wife who subsequently passed away. Once she passed I then fell into caring for my very aged parents. Once my father passed I considered reentering the work place. As this article points out employers are already stocked to the gills with young and middle aged applicants so they are disinclined to give much consideration to a man in his mid 60s with over 5 years of gap in their work experience.
Unfortunately my mother, who remains with me, is running out of her life savings. As a result I am having to borrow money against my assets and my future to try and keep her out of a nursing home. This does not bode well for me at all. I am having to consider leaving the country just to survive once she passes. I certainly do not want to become a burden on my two sons just because of poor planning on my parent's part or mine for that matter.
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