401(k) Matches Fall Victim to Downturn

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»

Accounts tumble by up to 11%, but backers still love them

(NEWSER) - Tumbling stock markets have cracked open the piggy bank that many Americans use to store retirement savings—401(k) accounts—sparking fresh debate about how best to save money, the Washington Post reports. Supporters argue that 401(k)s offer bigger rewards than traditional pensions, which are less exposed to market turbulence. But they lose more on average too—between 7.2% and 11.2% over the last year. 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»

Their money is in riskier investments these days

(NEWSER) - Among those hardest hit by the financial crisis are retirees, and they have less chance to recover than their younger counterparts, the New York Times reports. As companies have abandoned fixed pensions for 410(k)s, retirees can lose large percentages of their wealth in a short period. And low-risk investments, like bonds, simply don't offer enough income. More»

In part because they have to be

(NEWSER) - The good news is that at least one segment of the population has seen its employment statistics actually rise in this economic downturn. The bad news? That segment is older Americans, many of whom are only working because they're afraid they don't have enough savings to retire, the Washington Post reports. Since the start of the recession, the number of workers aged 55 and older has shot up by 3.1 million, or 12%. More»