Press Release / News
For U.S. Workers, No End in Sight
01 February, 2013
Even as stock prices rise, unemployment drops, and overall recovery takes
hold, more U.S. workers than ever are planning to delay retirement, according to
a new Executive Action Report from The Conference Board. Trapped on
the Worker Treadmill?
gItfs disconcerting that the two years in which the U.S. economy seemed to
finally, if fitfully, turn the corner also left so many more workers compelled
to change their retirement plans late in their careers,h said Gad Levanon,
Director of Macroeconomic Research at The Conference Board and a co-author of
the report. gThis may benefit some businesses and industries, by reducing labor
shortages and skill gaps as experienced workers stick around. At the same time,
their delaying retirement can be a significant obstacle to the many companies
seeking to cut costs. Mapping out the implications of the trend for individual
firms and the economy as a whole means first understanding the drivers behind
workersf retirement decisions.h
Dark Times Leave Long Shadows
Trapped on the Worker Treadmill? finds that workers
aged 45–60 whofve experienced a job loss, salary cut, or significant decline in
home price are much more likely to have plans for delaying retirement. The
proportion of respondents reporting each of those three misfortunes rose between
2010 and 2012, but only enough to explain some of the dramatic overall growth in
retirement postponement. In fact, the upward trend was apparent across all
gimpact categoriesh compared to 2010: Plans to delay retirement grew among those
whofd lost a job, those whofd had their salary cut, and even those whofd not
been significantly impacted by the recession. Likewise, across all regional,
ethnic, gender, and income lines, more older workers are preparing to extend
their daily grind.
A major factor in the growth of their numbers, finds the report, is the
continued depletion of savings. The U.S. recession officially ended in July 2009
and the stock market has rebounded strongly since then. In 2012, however, 62
percent of 45- to 60-year-olds reported at least a 20 percent decline in the
value of their financial assets since the start of the crisis — up from 42
percent in 2010.
gThe cumulative effect of drawing down assets in hard times — including the
loss of future gains during the recovery — helps explain the current plight of
older workers,h said Ben Cheng, co-author of the report. gEven as economic
conditions improve, many are still relying on assets to get by. And even those
whofve made it through the worst find themselves needing to work past retirement
age to rebuild savings.h
Macro Effects and Long-Term Trends
Regression analysis reveals that roughly half of the 21-percentage-point
increase in plans to delay retirement between 2010 and 2012 can be accounted for
by the direct recessionary impacts of job loss, salary reduction, depressed home
prices, and depleted savings. The remainder, according to the report, reflects
larger and longer-term economic and sociological factors.
For instance, interest rates on savings accounts, C.D.s, government bonds,
and other vehicles have fallen significantly since 2010. With low yields
expected to continue into the foreseeable future, workers may be pushing back
retirement in anticipation of smaller returns on their financial assets.
Similarly, the generation-long shift from defined-benefit to
defined-contribution retirement plans — alongside changes in Social Security and
the increasing scarcity of post-retirement employee health benefits — may be
incentivizing longer working years, as retirees shoulder more of the risk than
in decades past. Finally, better health and life expectancy have, quite apart
from the recession-related jump of recent years, pushed retirement age steadily
higher since the 1990s. People expect to live longer and fuller past age 65 —
and need more wealth to do so.
For complete details:
www.conference-board.org/publications/publicationlistall.cfm
Report:
Trapped on the Worker Treadmill?
Why more U.S. workers than ever before are planning to delay retirement
(Executive Action Series)
By Gad Levanon and Ben Cheng
Further Analysis at The Conference Board Human Capital Exchange blog:
gA Huge
Increase in the Percent of Workers Delaying Retirementh by Gad Levanon
About the Conference Board
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research association working in the public interest. Our mission is unique: To
provide the worldfs leading organizations with the practical knowledge they need
to improve their performance and better serve society. The Conference
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www.conference-board.org