Baby Boomer Examiner: Wall Street Jitters Force Baby Boomers to Rethink Retirement 

By Paul Briand, the Baby Boomer Examiner

September 23, 2008

The bad news is that current Wall Street jitters are making some Baby Boomers rethink how and when they are going to retire.

Ironically, in some people's minds, that's the good news too. Baby Boomers should delay they're retirement until they are on better financial footing, some say.

News outlets this week are full of stories on the impact the $700 billion government lifeline for failing financial institutions, and how it's creating a roller coaster on Wall Street that is scarier than any ride at Six Flags. There's the impact on oil prices, the impact on credit.

And there's the impact on the proverbial nest egg, which is typically a combination of savings, investments -- such as 401(k) -- and assets such as homes and property.

First, home equity took a hit with the mortgage crisis. Houses and property whose value continued to rise for many years as now fallen or flattened. As for savings, economists will tell you that Americans, Baby Boomers especially, have not saved for the rainy day that they should have. And investments, as we've seen this week on Wall Street, have been rocked.

The Wall Street Journal in an extended story yesterday cited example after example of retirement plans put on hold. It cited a mortgage broker in Raleigh, N.C., who estimates his nest egg has lost 20 percent of its value in the last 18 months. Another in Cottage Grove, Minn., has watched his 401(k) drop 16 percent since December.

A doctor in Columbus, Ohio, told the Journal he had planned to retire in two years at age 60, but he's watching his nest egg shrivel. "It's particularly tough if the market gets hit in your early years of retirement," he said in the Journal story. "If you're about to retire and something like this happens, maybe you should stay working."

Which is exactly what some researchers say should happen.

They cite statistics that show most people underestimate how much they'll need to retire and therefore don't have nearly enough money to retire when the time comes. For example, less than one quarter of workers age 55 and older have savings and investments totaling $250,000 or more, according to an April survey by the Employee Benefit Research Institute.

Advocates for delaying retirement say it's necessary for Boomers to stay in the work force longer to build up their 401(k) balance sheets and earn a bigger benefit from Social Security. For example, someone who is eligible to retire at 62 with $1,606 a month in Social Security could see that increase to $2,213 a month if he/she waited until they were 66 years old, $2,980 a month if he/she waited until 70.

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