The current financial crisis has caused American workers to lose $2 trillion in their retirement plans over the last 15 months, according to Peter Orszag, the head of the Congressional Budget Office.
Pension and other retirement funds - the most common form of savings for most Americans - have been decimated by the meltdown in financial markets, losing 20 percent of their value since mid-2007.
"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., chairman the House Education and Labor Committee, which is investigating how the current crisis is affecting workers retirement benefits. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."
According to Orszag, the loss of retirement funds could force Americans to consider working longer.
"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working," he said.
Others have completely stopped putting money into their 401(k) or IRA accounts, according to a study conducted by the Annual Association of Retired People. Others may panic and decide to withdraw funds from their accounts immediately, further exacerbating the problem.
Source CNNMoney.com:
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Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office. |