urban institute nonprofit social and economic policy research

How Is the Financial Crisis Affecting Retirement Savings?

Read complete document: PDF


PrintPrint this page
Share:
Share on Facebook Share on Twitter Share on LinkedIn Share on Digg Share on Reddit
| Email this pageE-mail
Document date: March 10, 2009
Released online: March 13, 2009

Abstract

The stock market lost 56 percent of its value between September 30, 2007 and March 6, 2009, a roughly $13 trillion drop. The loss has reduced the retirement savings of many Americans, particularly older adults. This fact sheet examines the impact of the ongoing economic turmoil on older households and presents estimates of the retirement account losses to date.


Introduction

The stock market lost 56 percent of its value between September 30, 2007, and March 6, 2009, a decline of about $13 trillion. These losses have reduced the retirement savings of older Americans.

How Much Have Retirement Accounts Fallen?

  • Assets in retirement accounts (defined contribution plans and IRAs) reached $8.5 trillion on September 30, 2007 (expressed in constant 2009 dollars). About 70 percent of these assets were invested in stocks. As of March 6, 2009, retirement accounts have lost $3.4 trillion, 40 percent of their value (figure 1).

How Is the Financial Turmoil Affecting Older Americans?

  • Older households typically hold less in stocks and are thus less exposed to market fluctuations than their younger counterparts. Nonetheless, equities account for about half of the assets in the typical account of households age 50 and older. Additionally, a loss disrupts retirement plans more for households nearing retirement than for those with many years before retirement, because older households have less time to recover.
  • The plummeting value of retirement assets could force older adults to delay retirement and remain at work and could encourage some retirees to return to work. However, contracting credit markets could weaken the labor market, limiting employment opportunities for older adults

(End of Excerpt. View the entire report in pdf format.)



Topics/Tags: | Employment | Retirement and Older Americans


Usage and reprints: Most publications may be downloaded free of charge from the web site and may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact publicaffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.

Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute.

Email this Page