In light of today’s job market, only 10% of displaced workers are confident they will be able to retire comfortably, says a new study released this week by the Transamerica Center for Retirement Studies. Those who are unemployed or underemployed have seen retirement savings dwindle to low points, especially for those who are in their 40s and 50s, many of whom have withdrawn upon the retirement savings they have previously amassed.
“The Great Recession has led to a potentially devastating impact on the retirement outlook of American workers who have become unemployed or underemployed,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Many have raided retirement accounts to make ends meet – and it will be difficult for them to overcome these savings setbacks once they regain employment. So, it’s vitally important to identify opportunities that may help improve their long-term retirement prospects.”
For displaced workers, Transamerica found the average retirement savings to be $5,800 with those in their 20s/30s. More than half reported having tapped into savings accounts, with 31% having used credit cards to help through the downturn and close to a quarter having turned to family and friends for loans.
However, the study found underemployed workers were much more likely to be taking some form of action to better the situation, including changing jobs or industries, making lifestyle changes or gaining more education. More an a third of unemployed workers reported not considering those changes.
“Any form of employment, including part-time or underemployment, has the potential to increase access to healthcare benefits, improve saving power, make a candidate more attractive for future career opportunities – and, ultimately, prevent early withdrawals from retirement accounts,” Collinson said.
Written by Elizabeth Ecker