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Downturn Cuts Into Retirement Accounts

By JULIE HIRSCHFELD DAVIS

posted: 1 DAY 17 HOURS AGO

comments: 0

filed under: Financial Crisis, Investing, Retirement, Retirement Advice

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WASHINGTON (Oct. 7) - Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.

The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.

As Congress investigates the causes and effects of the financial meltdown, the House Education and Labor Committee was hearing from retirement savings and budget analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.

"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."

More than half the people surveyed in an Associated Press-GfK poll taken Sept. 27-30 said they worry they will have to work longer because the value of their retirement savings has declined.

Orszag indicated the fear is well-founded. Public and private pension funds and employees' private retirement savings accounts -- like 401(k)s -- have lost some 20 percent overall since mid-2007, he estimated. Private retirement plans may have suffered slightly more because those holdings are more heavily skewed toward stocks, Orszag added.

"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working," Orszag said.

A new AARP study found that because of the economic downturn, one in five workers 45 and older has stopped putting money into a 401(k), IRA or other retirement savings account during the past year, and nearly one in four has increased the number of hours he works.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2008-10-07 13:47:10

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mobdev 05:19:06 PM Oct 07 2008

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But once republicans steal all the Social Security money, of course, we will have to bail it out AGAIN. Get it? The same idea - steal money from the most vital parts of the economy and MAKE everybody pay for it. Crooks. Go Obama!

mobdev 05:17:09 PM Oct 07 2008

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Gore basic argument against privitazing S.S is that s.s is minimum SECURITY provided by government to EVERYBODY and you cannot make LOSERS and WINNERS out of it. If you make S.S. private, there will be LOSERS, which is counter the whole idea of social SECURITY. All republicans want to get their hands on trillions of dollars.

mobdev 05:13:39 PM Oct 07 2008

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Telebob52 <<< may be wrong but didnt Al Gore want to take Social Security and invest it in wall st. and mutual funds>>>=== you are wrong - read this http://www.ontheissues.org/celeb/Al_Gore_Social_Security.htm

Toogeorge 05:05:05 PM Oct 07 2008

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THAT'S NOT ALL!Fed officials said they'll buy as much of the debt as necessary to get the market functioning again. They refused to say how much that might be, but they noted that around $1.3 trillion worth of commercial paper would qualify. $850,000,000,000 SEEMS TO BE NOTHING TO OUR GOVERNMENT, NOW THEY PLAN TO SPEND ANOTHER $1,300,000,000,000 OF OUR MONEY. JUST REMEMBER I AND OTHER TAXPAYERS, OUR CHILDREN AND MAYBE GRANDCHILDREN WILL BE PICKING UP THE TAB. OH, AND DON'T FORGET, TO ONE PRESIDENTIAL CANDIDATE 'THE ECONOMY IS FUNDAMENTALLY SOUND'.---- WOW, HOW FAR OFF CAN YOU BE?

Telebob52 04:52:48 PM Oct 07 2008

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I may be wrong but didnt Al Gore want to take Social Security and invest it in wall st. and mutual funds.He had this elaborate plan he laid out during one of his debates.Seems like every body in wash. has a better idea for whats left of s.s. money.

Toogeorge 04:15:12 PM Oct 07 2008

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Fed officials said they'll buy as much of the debt as necessary to get the market functioning again. They refused to say how much that might be, but they noted that around $1.3 trillion worth of commercial paper would qualify. $850,000,000,000 SEEMS TO BE NOTHING TO OUR GOVERNMENT, NOW THEY PLAN TO SPEND ANOTHER $1,300,000,000,000 OF OUR MONEY. JUST REMEMBER I AND OTHER TAXPAYERS, OUR CHILDREN AND MAYBE GRANDCHILDREN WILL BE PICKING UP THE TAB. OH, AND DON'T FORGET, TO ONE PRESIDENTIAL CANDIDATE 'THE ECONOMY IS FUNDAMENTALLY SOUND'.---- WOW, HOW FAR OFF CAN YOU BE?

Macungiee8 04:05:47 PM Oct 07 2008

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I agree with not voting for McCain, Obama is no muslim, besides he is a half black and half white, raised by white grand parents, usually it's the other way around. But regardless, after Hoover, Roosevelt was elected and it took quite some time to even get the soup lines down, don't expect a magic wand in Obama's hand. I already voted, absentee, I know of two votes for Obama/Biden.....I walk the walk, talk is cheap, get out there a vote America....

mobdev 04:01:17 PM Oct 07 2008

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And Bush/McCain/Palin want to give your Social Security money to Wall Street. Hahaha. Anybody who votes republican is an irretrievable moron. I would rather vote for a black muslem preident than for white Christian Crooks McCain/Palin

mobdev 03:58:07 PM Oct 07 2008

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Finally I can say to all my friends who laughted at me for keeping all my money in savings account - who is laughing now? Hahahahahah.....

Telebob52 03:56:12 PM Oct 07 2008

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wow...boomers are to blame for everything?Hell lets say white boomers and be done with it.Im a boomer...not my fault,just born at that time.I own my own house,my own money,my own retirement.Never took a dime from the gov for anything.I would like my Social Security when im able to collect being that ive been paying into it since i was 18.Every body else got a piece of it...why not the guy who paid into it. I raised three kids...a disabled son and two good daughters...got them through college without crying and expecting a handout.I bought all my cars and boats cash.I recently lease...its easier.Is this a defining characteristic of boomers or am i the exception.And what in your small brain allows you to decide who is what?

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