NCPA - National Center for Policy Analysis


October 8, 2008

According to a new survey by AARP -- an advocacy group for older Americans -- one in five middle-aged workers stopped contributing to their retirement plans in the last year, and one in three has considered delaying retirement.  The numbers provide the latest evidence that the deteriorating economy and stock market are creating a less-than-golden outlook for the huge tide of baby-boom Americans surging into retirement age.

The survey, which was conducted during a three-week period ending September 21 -- before the worst of the stock market's recent swoon, when retirement accounts were heavily weighted toward stock mutual funds -- covered 1,628 employed people over 45 years old.  Researchers found that 20 percent had stopped participating in their retirement accounts in the past year, 34 percent contemplated putting off retirement and 27 percent said they were having trouble making rent or mortgage payments.


  • More people have been pulling money out of their nest eggs before age 59-and-a-half, even though such withdrawals bring a tax penalty; nearly 13 percent were found to prematurely withdraw funds from investments such as individual retirement accounts and 401(k) plans.
  • People who have a high-school degree or less were more likely to have stopped saving -- 24 percent compared with 16 percent of others surveyed.
  • People with incomes less than $30,000 a year, Hispanics and women were also more likely to stop retirement saving.
  • Of the people who stopped making retirement-plan contributions, 83 percent said they didn't have enough money left over after current expenses.

Jean Setzfand, who directs AARP's financial-education efforts and oversaw the survey, said most respondents believe they need to contribute more to their retirement accounts, but those who have stopped, are having trouble making ends meet for basic expenses like food, gas and utilities.

Source: William M. Bulkeley, "One in Five Baby Boomers Cuts Retirement Saving," Wall Street Journal, October 7, 2008.

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