The Center for Retirement Research says that the "Great Recession" has cost retirees a lot of money. As bad as that sounds, what's really bad about it is that about 700,000 people are going to be living much closer to the poverty line:
Economic instability sometimes comes with a permanent effect on members of society. It's not enough to talk about how we're "coming out" of a recession; some people are permanently damaged by hard times.
- Workers between the ages of 25 and 34 in 2008 (the height of the recession) will see an average drop of 4.9 percent in retirement income after age 70 — a hit to their pocketbooks of roughly $3,000 a year. Furthermore, the slowdown in wage growth will accumulate over their entire careers.
- Those between the ages of 55 to 64 in 2008 will see a 4.1 percent drop in retirement income, primarily in the form of lower Social Security benefits. This problem is compounded by the fact that many older workers who lost their jobs during the recession were forced into early retirement.
- Future retirement income will fall the most for those with the highest incomes. Among the youngest age group, for example, those in the top 20 percent income bracket will lose $7,500 annually, while those in the bottom group will lose only $400 a year.
- The decline in household income will increase the number of Americans living on limited incomes at age 70. Among people between the ages of 25 to 64 in 2008, the share with incomes below 125 percent of the federal poverty level at age 70 will increase 7.4 percent. That translates into an additional 711,000 adults living in or near poverty.