US News & World Report, May 27th, 2008

As gas and grocery prices rise, some cash-strapped older workers are
rethinking plans to retire. Some 27 percent of older workers say they
are putting off retirement because of the recent economic slowdown,
according to a recent AARP telephone survey
of 1,002 workers over age 45. Almost 25 percent of people between the
ages of 45 and 64 are taking money out of their 401(k)’s and other
investments. And younger baby boomers between the ages of 45 and 54 say
they are even postponing paying bills (27 percent) and cutting back on
medications (17 percent).

“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,” says Tom Nelson,
AARP’s chief operating officer. “Even more troubling, shortchanging
your healthcare can lead to higher healthcare costs down the road.”

But for retirees already on fixed incomes, it’s too late to change
retirement plans short of re-entering the workforce. With each interest
rate cut, retirees lose income on their savings in certificates of
deposit and other interest-bearing accounts. Some 26 percent of
retirees say falling interest rates have cut into their income. And
nearly three quarters of respondents who own mutual funds, IRAs, or
401(k)’s say they have lost money, on paper at least, in the past 12
months as the stock market has declined.

Fixed incomes don’t stretch, of course, when everyday expenses soar.
Some 59 percent of those over age 65 say they’re having a hard time
paying for food, gas, and medicine. On top of that, fully a third of
retirees say they have helped a child pay bills in the past year. About
11 percent of retirees report seeking help from loved ones or charity
in the past year.

“Retirees and older Americans have had to deal with skyrocketing
healthcare costs on fixed incomes for years,” Nelson says. “For them,
the current economic slump means more of the same.”

Has this year been more of the same? Or do you think retirees have been hit especially hard by this economic slowdown?

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