old-worker.jpgThere’s been a lot written on the impending labor shortage in this country that’s expected as the Baby Boomers barrel towards retirement. I’ve even done my share of these stories.

But more and more I’m starting to think there is going to be a surplus of workers in the years ahead. Why? Because people can’t afford to retire.

The crummy U.S. savings rate, the death of pensions and the growth of 401(k)s, many of which are now in the toilet because of Wall Street’s stupidity, are all conspiring to create a class of workers heading for their golden years that won’t be able to afford retirement.

Already we’re seeing a growing number of the 65-plus crowd continuing to punch a clock. About 15.4 percent of people aged 65 and older were still in the labor force in 2006, a jump from 12.1 percent in 1996, according to the most recent Bureau of Labor Statistics’ most recent figures.

There are two scary story in major newspapers this morning related to this problem.

One in the New York Times about older Americans who are faced with the diminishing value of their 401(k)s and are terrified about what the future holds:

“There’s a terrified older population out there,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. “If you’re 45 and the market goes down, it bothers you, but it comes back. But if you’re retired or about to retire, you might have to sell your assets before they have a chance to recover. And people don’t have the luxury of being in bonds because they don’t yield enough for how long we live.”

Today’s retirees have less money in savings, longer life expectancies and greater exposure to market risk than any retirees since World War II. Even before the last week of turmoil, 39 percent of retirees said they expected to outlive their savings, up from 29 percent in 2007, according to a survey by the Employee Benefit Research Institute, an industry-sponsored group in Washington.

“This really highlights the new world of retirement,” said Richard Johnson, a principal research associate at the Urban Institute in Washington. “It’s a much riskier world for retirees, because people don’t have defined-benefit plans. They have pots of money and they have to worry about making it last.”

And a story in the Wall Street Journal on how retirees are being forced to take money out of their 401 (k)s to pay for living expenses because of the struggling economy:

With stocks falling, credit tightening and unemployment rising, small investors have been raiding their 401(k) accounts or slashing contributions to the popular retirement plans, according to the latest tallies of plan administrators. Others, eager to shield their portfolios from further damage, are reducing their exposure to stock mutual funds to near record lows.

The behavior — described by some market watchers as panicky in the past week — has led to worries that the retirement prospects are dimming further for Americans, most of whom no longer have private-sector pensions to rely on.

Recent 401(k) winnowing is coming in the form of “hardship withdrawals” — removing cash from the fund, with a 10% tax penalty, for exigencies such as job loss, the prospect of losing your home to foreclosure or a big medical expense.

It’s a sad state of affairs for the individuals that have worked all their lives to provide for their families and also keep this nation running.

This week, Congress is debating whether to bail out Wall Street’s elite who, by their own greed-inspired stupidity, have brought down the financial system in the United States.

Everyone saw the markets as the economy’s savor. The Bush Administration even considered pinning Social Security to the stock market during the heydays just a few years ago.

And businesses didn’t want the burden of pensions, opting instead to push their workers into the riskier 401 (k) options. But now it seems pretty clear — the traditional pension system wasn’t such a stupid idea after all.

Can we bring pensions back? Some of that $700 billion that Congress is considering sending to Wall Street might be better served shoring up a new national pension system, or infusing Social Security with some much needed funds. No?

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