New York - The recession has put even greater pressure on workers to stay on the job, according to a new report from the Conference Board, which found several trends unique to the latest recession.

The health industry experienced the largest decline in retirement rates. In 2009-2010, only 1.55 percent of full-time workers aged 55-64 retired within 12 months, compared with almost 4 percent in 2004-2007. The construction industry also experienced a large decline in retirement rates. This was likely the result of a long slump in the industry, which resulted in many laid-off workers staying in the labor force to make up for lost income.

There was essentially no retirement delay among government workers. That is expected, since they are more likely to receive defined benefits, making them more insulated from the decline in financial asset values in their pensions.

Mature workers in high-paying occupations were much more likely to delay retirement than those in low-paying ones. Those in higher-paying jobs tend to have higher financial expectations for their retirement years. In addition, high-paying occupations tend to have limited physical requirements, making it easier to continue working. Among lower-paid workers, there is often an increased physical demand, and unemployment rates tend to be much higher. As a result, even if those workers wanted to continue working, finding replacement jobs is often extremely difficult.

Delayed retirement has affected the demographic distribution within the United States. Part of the decline in net migration to states like Florida and Arizona is likely due to the trend of delayed retirement, with fewer individuals leaving the labor force and moving to retirement destinations.

Those who suffered from a significant decline in home or financial asset values, lost a job, or experienced a compensation cut during the recession were much more likely to delay retirement. Workers in states where home prices suffered especially large slumps, such as California, Michigan, Florida and Arizona, were also more likely to delay retirement.



Arlington, Va. - Proposals to scale back or eliminate the tax incentives of investing in 401(k) retirement plans, as called for by some budget deficit reduction plans, are based on faulty math, according to new research from the American Society of Pension Professionals & Actuaries, which shows the real cost of retirement savings incentives to be 55 to 75 percent lower than claimed by budget hawks.

When evaluating the cost of the tax deferrals associated with defined-contribution retirement plans, the Congressional Joint Committee on Taxation and the Treasury Department's Office of Tax Analysis both use current cash-flow analysis. Since workers withdraw money from these plans only in retirement, the taxes paid show up outside the 10-year time frame used in cash-flow analysis, and therefore are "scored" as lost revenue, rather than deferred revenue, even though the deferred taxes ultimately are paid.

That analysis dramatically exaggerates the cost of the tax incentives. In fact, using present-value analysis - which economists typically use for long-term analysis - economist Judy Xanthopoulos and tax attorney Mary Schmitt have calculated that present-value estimates of the five-year cost of retirement savings tax expenditure are 55 percent lower than those of the JCT and 75 percent lower than those of the OTA.

The benefits of 401(k) plans go disproportionately to working families with less than $100,000 in income, who receive 62 percent of the tax benefits associated with such retirement plans, despite paying only 26 percent of total federal income taxes.

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