Tuesday, February 5, 2013

Middle-aged job loss takes 3 years off your life

New revelations about Baby Boomers' financial problems show that it would be sheer insanity to cut Social Security and raise the Medicare eligibility age.

First, three out of five Baby Boomers are working longer than they want to because they can't afford to retire.

Things are even worse for Baby Boomers who lose their job as they approach retirement age. They'll also lose three years off their life.

The New York Times yesterday painted a bleak picture for aging workers since the last recession (and let's face it, the recession never ended for a lot of people):
These Americans in their 50s and early 60s — those near retirement age who do not yet have access to Medicare and Social Security — have lost the most earnings power of any age group, with their household incomes 10 percent below what they made when the recovery began three years ago, according to Sentier Research, a data analysis company. 
Their retirement savings and home values fell sharply at the worst possible time: just before they needed to cash out. They are supporting both aged parents and unemployed young-adult children, earning them the inauspicious nickname “Generation Squeeze.” 
New research suggests that they may die sooner, because their health, income security and mental well-being were battered by recession at a crucial time in their lives. A recent study by economists at Wellesley College found that people who lost their jobs in the few years before becoming eligible for Social Security lost up to three years from their life expectancy...
That study, released last fall, also shows
The longevity of workers who have already hit age 62, the minimum age for Social Security eligibility, are not affected, presumably because of the safety net that Social Security provides.
A more recent study by the Employee Benefits Research Institute shows 75 percent of retirees said they worked longer than they had to in order to keep their health benefits. And 25 percent of survey respondents said they'd retire early if they had access to health care.
A Conference Board report says the same thing, according to US News:
The share of American workers who plan to delay retirement has grown dramatically in just two years...
Survey respondents cited declines in home prices, job losses, and salary reductions all as factors in delaying retirement. Fully 62 percent of respondents last year said the loss of work or salary contributed to the delay, compared to 48 percent in 2010. Likewise, 62 percent cited a decline in housing values, up from 42 percent in 2010.
All of this is lousy news for young people entering the work force. The unemployment rate for Americans aged 18-29 was 13.1 percent during January, compared with an overall unemployment rate of 7.9 percent. Baby Boomers aren't getting out of the way for young people, and difficulty finding work now will mean weaker job prospects long into the future.

And then, of course, they'll have to delay retirement...