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.
When the economy is booming and needs workers to stick around, retirees with fat 401(k)s are cashing out. In recession, when they're not needed, their accounts are depleted, so they're declining to retire. By comparison, many European countries have recession-proof pensions; in Denmark, a worker gets 91% of her pre-retirement salary. Policymakers are examining the possibility of creating stronger retirement safety nets, but that may prove a challenge. “I don’t want to depend on anybody else in my retirement,” one would-be retiree says. “Not family members, not our children, and certainly not the government.”