As numbers on Wall Street continue to plunge, many older Americans preparing to retire are forced to choose between decreasing their standard of living or continuing to work. John Challenger, CEO of Chicago-based outplacement firm Challenger, Gray & Christmas, Inc., warns that either option will have serious economical repercussions.
As more older Americans continue to work rather than retire, fewer upper-level positions open up for younger employees, which hinders their income and subsequently their spending. Retirees forced to cut their standard of living must curtail their spending habits as well. Both scenarios mean less spending, which in turn hinders economic growth, according to Challenger.
Challenger also predicts that people of retirement age will continue to work because loss of wealth is a humiliating secret that is tough to conceal from family and friends. Challenger notes that it is easier for retirees to convince people that continuing to work is a means of avoiding boredom rather than a financial necessity. While larger companies may be able to offer lucrative retirement packages for older workers, smaller companies are less likely to have the resources to do so.
This change in the workplace demographic will force many companies to re-evaluate plans for opening up positions to younger workers. According to the Bureau of Labor Statistics, the number of workers 55 or older jumped by 8.4 percent (1.6 million people) from June 2001 to June 2002. Additionally, a Gallup poll conducted in January found that roughly a quarter of people in their 50's and a fifth of those in their 60's are considering delaying retirement.
Seniors who choose to retire and cut their standard of living will also seriously impact the economy, Challenger warns. The population of seniors in the Unites States is growing, and is among the wealthiest ever. They were predicted to pour money into the economy through purchasing goods and services such as cruises, new homes, sports cars, and travel and leisure activities.
Challenger also notes that some seniors who continue to work will still find it necessary to cut back their lifestyle costs.
