Retirees Hit Hard by Markets

When fund ran dry, it stopped paying its retirees

(NEWSER) - When an Alabama town’s pension fund ran out, it simply stopped sending money to its retirees—a decision that’s never been made before, pension experts believe. That left retired public workers struggling: Some returned to work, one filed for bankruptcy, and one died with no electricity or running water at home. The New York Times calls the case a warning to other cities and states with tight pension funds. More»

Reliance on volatile 401(k)s breeds reluctance to retire

(NEWSER) - Their retirement savings devastated by the financial crisis, older workers are increasingly postponing retirement, the New York Times reports, creating even more competition for scarce jobs. A recent survey found that four in 10 workers over 62 have remained at their jobs longer than they planned thanks to the recession. Our dependence on fluctuating 401(k)s for retirement is turning out to have a perverse effect on the economy, the Times notes. "It’s a sort of reverse automatic stabilizer,” says one economics prof. More»

(NEWSER) - Low inflation could force the IRS to decrease the amount workers can contribute to their 401(k) plans to $16,000, USA Today reports. It would mark the first time the government has ever lowered contribution limits. Though a spokesperson says it’s too early for speculation, the IRS may not have any choice. "A strict interpretation of the code could lead them to believe that's their only option," a consultant says. More»

Housing bust leads to 'age desegregaton'

(NEWSER) - A rash of vacancies caused by the ugly housing market has prompted many retirement communities to consider lowering, or even eliminating, age restrictions, the Wall Street Journal reports. Many of the communities enjoy lower taxes, and child- and teen-free living appeals to some seniors. But what's being call "age desegregation" may be necessary to keep these enclaves afloat during the economic downturn. More»

Cost-cutting efforts increasingly extend to pricey employee benefit

(NEWSER) - Shrinking 401(k) accounts may soon seem like a bit of a luxury as more and more companies eliminate matching contributions to the retirement accounts, reports BusinessWeek. Some 2% of firms in a recent survey said they had already cut out the match, and another 4% said they’ll drop it within the next year as the economy worsens. More»