How Is the Economic Turmoil Affecting Older Americans?

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Abstract

The slumping stock market, falling housing prices, and weakening economy have serious repercussions for older Americans who are approaching retirement or already retired. Seniors have little time to recoup the values of their homes, 401(k) plans, and individual retirement accounts—all important parts of their retirement nest eggs. More and more older adults are working to bolster their retirement incomes, but the rising unemployment rate limits their prospects. This fact sheet examines the impact of the ongoing economic turmoil on retirement savings, home values, and retirement decisions.

Introduction

The slumping stock market, falling housing prices, and weakening economy have serious repercussions for the 94 million Americans age 50 and older who are approaching retirement or already retired. Retirement accounts lost about 18 percent of their value over the past 12 months, and between January 2007 and May 2008, housing prices fell from 4 to 20 percent depending on where seniors live. Older Americans have little time to recoup the values of their homes, 401(k) plans, and individual retirement accounts—all important parts of their retirement nest eggs. More and more older Americans are working to bolster their retirement incomes, but the rising unemployment rate, now 6.1 percent, limits their prospects. This fact sheet examines the impact of the ongoing economic turmoil on retirement savings, home values, and retirement decisions.

How Does the Financial Turmoil Affect Older Americans’ Retirement Savings?

The stock market lost 27 percent of its value between September 30, 2007 and September 30, 2008, a roughly $7 trillion drop. The loss has reduced the retirement savings of many Americans, particularly older adults.

How Much of Older Adults’ Retirement Accounts Is Invested in Stocks?

• Forty-nine percent of households ages 50 and older own retirement accounts. Seventynine percent of these accounts include stock holdings.
• The typical retirement account of households ages 50 and older invests 50 percent of its assets in stocks. However, households ages 70 and older hold much less in stocks, reducing their exposure to market fluctuations.

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