The title of a new study on the retirement outlook for unemployed Americans says it all: The Cracked Nest Egg.
And, no surprise, the report from the Transamerica Center for Retirement Studies paints a disturbing picture.
From the non-profit’s report:
– The majority (61 percent) of displaced workers reported having a retirement savings account of some kind. Yet, while 87 percent were familiar with the severe taxes and penalties that may apply when they withdraw funds from those accounts, 35 percent had done so.
– Of those who were in a 401(k) plan at their last full-time employer, 45 percent had taken a withdrawal from these accounts. Notably, 63 percent of the unemployed had taken a withdrawal, compared to 34 percent of workers considered underemployed.
Among the displaced workers, including those with or without retirement accounts of their own, the estimated median household savings in retirement accounts was approximately $5,800.
“The Great Recession has led to a potentially devastating impact on the retirement outlook of American workers who have become unemployed or underemployed,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies.
“Many have raided retirement accounts to make ends meet – and it will be difficult for them to overcome these savings setbacks once they regain employment.”
Collinson added that, “Older workers have been hit hard by unemployment or underemployment and they are at greatest risk. Many face challenges finding employment and, when they do, they will have much less time than younger workers to rebuild their savings before they reach retirement age.”
The survey also found that many displaced workers have relied on personal savings and/or gone into debt since becoming unemployed or underemployed.
Among the other findings:
– More than half (51 percent) have tapped into savings accounts.
– Nearly one‐third (31 percent) have used credit cards, suggesting an increased likelihood of future carry‐over balances.
– One in four (24 percent) have turned to family and friends for loans.
– Three in ten (30 percent) do not have health care insurance, broken into 34 percent of the unemployed and 27 percent of the underemployed.