The current economic climate has brought a new uncertainty to the retirement plans of millions of Americans. New pressures, such as business failures, unemployment, reduction or elimination of 401(k) matches and the freezing of defined benefit pensions, are endangering traditional, employment-based ways of funding retirement. At the same time, Americans are experiencing an ongoing decline in value of their largest asset, their homes, which may make a sale or reverse mortgage unattractive.
Social Security, the social safety net designed to help those who have inadequate retirement savings, is now largely accepted to be unsustainable at current levels, with a reduction in those benefits likely. For one quarter of current retirees, Social Security is their only source of income, and for almost three-quarters, it is their primary source. That dependence is expected to grow as baby boomers retire. Demographic shifts are combining with the economic crisis of late to force a shift in the way Americans view retirement. Many retirees are returning to work, while “phased” retirement is being advocated as a way to ease workers into retirement.