Forced to put retirement on hold

Some 27% of American workers aged 45 and older are putting their retirement on hold, according to AARP survey.

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: May 13, 2008: 9:58 AM EDT

NEW YORK (CNNMoney.com) -- The economic downturn is hitting middle-aged and older American workers hard, forcing more than one in four to postpone retirement, according to a survey released Tuesday by the AARP.

Twenty-seven percent of workers aged 45 and older said they had put their retirement plans on hold because of the slowing economy, AARP reported.

"The current economic downturn is forcing millions of Americans to make very difficult decisions on their immediate survival and long-term financial security," Tom Nelson, AARP's chief operating officer, said in a statement.

Baby boomers and retirees agree that the economy is in bad or fairly bad condition and that the government should be doing more to help, the survey of Americans 45 and over showed.

Eighty-one percent said the economy is weak, and 74% said their elected officials were not doing enough to help people who are being squeezed by the slowdown.

Boomers hurting more than their parents. Boomers - those between the ages of 45 and 64 - are feeling the impact of the slowdown more than their parents and are reacting in ways that have risky implications for the future, the AARP said.

Nearly one in four boomers said they were taking money out of their 401(k) retirement plans and other investments early.

"Taking money out of your retirement savings has a compounding effect because that money is not allowed to grow at a time when you have fewer working years to replace the losses," Nelson said.

Younger boomers between the ages of 45 and 54 are having a particularly difficult time, with 17% of them saying they had cut back on medications. By comparison, only 10% of Americans 65 and older said they were doing the same.

Older Americans struggle too, but they cope better. Americans aged 65 and older are struggling too. Nearly 59% in this age group said they were having trouble keeping up with the rising costs of food, gas and medicine.

But this older generation of Americans has more experience dealing with higher costs on a fixed income. They're also more likely to own their own home and be covered by healthcare programs like Medicare, the report said.

"Retirees and older Americans have had to deal with skyrocketing health care costs on fixed incomes for years," said Nelson. "For them, the current economic slump means more of the same."

The AARP survey was conducted April 12-23 by Woelfel Research, Inc. About 1,000 people were contacted for the national telephone survey.

http://money.cnn.com/2008/05/13/news/ec ... 2008051309