How Victims of This Economy Can Replenish a Depleted Retirement Account

NEW YORK (MainStreet) — It's common knowledge among financial advisers — and probably among middle-age adults sitting at kitchen tables all over the country — that Americans are anxious over their retirement funds.

Very anxious.

In Transamerica's annual retirement survey, analysts found that 62% of so-called "displaced workers" aren't confident about retiring in comfort.

Transamerica says those displaced worker have suffered financial setbacks, such as a job loss or getting their hours cut at a job and working only part time. With 97% of all jobs created so far this year classified as part time, Transamerica expects that trend to continue — along with some bad financial habits.

"Amid signs of economic recovery and an improving unemployment rate, millions of Americans are still unemployed or underemployed," says Catherine Collinson, president of TCRS. "Many displaced workers have raided their retirement accounts to make ends meet, and many may be overlooking the importance of retirement benefits as they seek meaningful employment. It's critical that we raise awareness of the issues and identify opportunities to help them rebuild their long-term financial futures."

Transamerica reports the following on displaced workers:

  • 59% of displaced workers have a retirement account.
  • 36% of those workers have already raided that retirement account for much-needed cash.
  • Among U.S. displaced workers, the average amount stashed away in retirement accounts is disturbingly low — $7,500, with workers in their 50s having only $16,000.

How long people are either out of work or "underemployed" is a big factor in retirement fund troubles.

"The passage of time out of work, especially the one-year mark, can have a detrimental effect on retirement accounts," Collinson says. "Forty-two percent of those displaced for a year or more took a withdrawal, compared to only 23% of those displaced for less than a year."

Another big differentiator is having a college education — even for laid-off or underemployed Americans.

"A college education can open employment doors and offer higher pay — and lead to substantially more retirement savings," Collinson says. "Displaced workers with a college degree have saved an estimated median of $60,300, versus those with a high school diploma or some college who have saved $3,300."

How can displaced workers make some of that retirement money back in the fold?

Transamerica provides the following tips:

  • Be a budget hawk. Can you share the burden of your living expenses? Take in a boarder? Downsize your home? None of the above are easy, but they're proven ways of rebuilding a retirement fund.
  • Work part time. If you're not working part time, get a part-time job ASAP. Part-time work can be a bridge to full-time work and keeps you in the game with potential full-time employers (who prefer hiring workers with any job than with no job.)
  • Spruce up your skills. Get out there and take advantage of free or low-cost business and career skills classes at local educational centers or community colleges.
  • Don't focus solely on salary.When interviewing for full-time employment, take a close look at retirement benefits packages. A good 401(k) matching plan, for example, can speed up your retirement savings plan.

Above all, keep your head up — things will get better if you take concrete steps to accelerate your career and your retirement savings.

"Staying positive and focused, improving job prospects when possible and earning part-time income are crucial to reducing dependence on retirement funds to cover expenses," Collinson says.

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