“If you are laid off at 55, your retirement planning has probably been replaced by crisis planning. The Government Accounting Office released a report this morning pointing out that the seasonally unadjusted unemployment rate for older workers increased from 3.1 percent in December 2007 to a high of 7.6 percent in February 2010, before decreasing to 6 percent in April.
…When older workers do find another job, on average, they earn 15 percent less than they did previously. Younger people either match or improve their wages when they are rehired.
Time out of work and a lower salary after being rehired has a serious impact on savings. For a former employee with a 401(k) retirement plan, joblessness — even if the worker doesn’t dip into the plan — can mean fewer years to save and a lower overall contribution. In the case of workers with a traditional pension, losing a job can prevent them from vesting.
The GAO also pointed out that joblessness pushes people into claiming Social Security at 62, which not only lowers their benefit, but also can reduce the benefit overall because, had the person stayed on the job, their benefit would have reflected higher earnings.”