Crisis Drains $2T From Retirement Savings

Tumbling values may mean more workers have to stay on jobs longer, retire later

By Jim O'Neill, Newser User

Posted Oct 8, 2008 10:31 AM CDT

(Newser) – The financial crisis has drained $2 trillion from Americans' retirement savings over the past 15 months, reports the Washington Post, a 20% drop in the value of pensions and 401(k) plans that may force many to retire later and could spread to the general economy as workers tighten belts further. The decline has renewed debate about whether 401(k) plans, heavily linked to the market and heavily pushed by the government, are smart retirement investments.

"The loss of retirement security is a reversal of fortune and the result of very specific flawed governmental policies that have been biased toward 401(k) plans," said one professor.
"Markets do go up and down, and 401(k) participants must try to remember to think long-term," countered one consultant. Younger workers who typically invest more in stocks have been most affected by the market's plunge.

[Images (5)]

[Quotes (2)]

A board at the New York Stock Exchange shows the closing number for the Dow Jones Industrial Average, Tuesday Oct. 7, 2008. (AP Photo/Richard Drew)

Traders gather at a post on the New York Stock Exchange floor, Tuesday Oct. 7, 2008. (AP Photo/Richard Drew)

Trader Dudley Devine leans on a phone post on the New York Stock Exchange floor, Monday Oct. 6, 2008. (AP Photo/Richard Drew)

The Wall Street sign is juxtaposed against the sculpture on the facade of the New York Stock Exchange, Friday Oct. 3, 2008. (AP Photo/Richard Drew)

Wall St. is shown Tuesday, Sept. 30, 2008 in New York. (AP Photo/Mark Lennihan)

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Unlike Wall Street executives, American families don't have a golden parachute. - Rep. George Miller (D-Calif.)

It's clear that Americans' retirement security may be one of the greatest casualties of this financial crisis. - Rep. George Miller (D-Calif.)

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Crisis Drains $2T From Retirement Savings