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Job loss at 55 is bad news

By Jennie L. Phipps · Bankrate.com
Wednesday, May 16, 2012
Posted: 2 pm ET

If you are laid off at 55, your retirement planning has probably been replaced by crisis planning.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.

While this rate is low compared to other segments of the population, the impact can be severe for a couple of reasons. By 2011, one-third of all unemployed people older than 55 had been out of work for more than a year -- much longer than other segments of the population. 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.

The author of the report, economist Charles Jeszeck, who is GAO's director of education, workforce, and income security, says one of the things driving up the government unemployment rate for older workers is the number of people who left the workforce when the economy soured who are now hunting for jobs as things appear to improve.

Availability of health care is a big factor, Jeszeck says. People who are not eligible for Medicare and who have exhausted their right to buy health care through the Consolidated Omnibus Budget Reconciliation Act, or COBRA, are eager to find positions that provide coverage. That may be a pipe dream. Jeszeck's report offers anecdotal evidence that employers are very reluctant to fill that need because it drives up their insurance costs.

Jeszeck concludes that there is an enormous need to create more jobs, but as a federal employee, he doesn't endorse any of the plans on the table. He is critical of the situation. "To some extent, this is the result of the gridlock in Washington," he says. "There are so many things that need to be done, but most of them won't happen until the gridlock is addressed."

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41 Comments
Harold Winkler
July 14, 2012 at 12:00 pm

When I met my wife in a bar just off base where my ship was double parked, I told her... "Babe, marry me andyou won't hafta work in a bar anymore." So, now she works for me at home. I can still afford cigars and she don't mind working for every one! Our neighbors love her! She don't bark at night either... Now, if dat aint class, wat is?

Hap
July 14, 2012 at 2:19 am

I'm sorry so many of you are on a downer. Get over it, every dawn starts a new day.
My mother was a single parent. She was a secretary at a large corp. She bought her managers stock options because he did not have the money to do it. She went to night school to become a lawyer. I learned golf by watching tv so I could teach her when she came home from night school. I don't remember having a bad childhood and I never bought into the fact there wasn't an opportunity for me to learn how to try the unknown. I know some get hit with knockout punches, but for the most part people can and do come back.
When I got laid off at 48 and could not get a job, I read everything I could about business. I never figured it out, but my hobby of going to open houses took me into investing in real estate. That one worked out. I tried investing in the stock market and got beat up in 2008. I am still doing it and have not given up.
I think as long as you have a reason to get up every day and have something you like to do, it is a good day.
Dream and try for success. Do not let doubt control you.

Robin
July 13, 2012 at 7:54 pm

I feel so sorry for single parents, especially those who left their jobs to raise children. Divorce happens and that parent goes down with the ship in this economy. At 50 something, they have no seniority whatsoever as they try to compete for jobs (against newly laid off and college grads), health care benefits, and the like. If very lucky, their children will have healthcare covered by the other parent, but those who have had benefits all their lives from their own early jobs and marriage are suddenly thrown under the bus. Oprah believes that one of the most important and dignified jobs in the world is to raise children. Where is the dignity now? It has turned into a job of shame, rejection, and powerlessness.

Rocco Fugaro
July 13, 2012 at 11:49 am

We are in the mists of a millinium flux. At the begining of every century there is tremendous upheavel in all aspects of society from art to science from economics to culture. By 2050 things will come together, there will be whole new fields and jobs opening up, new technologies, longer life,l social change. I can't wait to be a part of it.

KEVIN
July 12, 2012 at 9:54 pm

The enconomic/mental/physical angst experienced by those aged 50 - 62 upon being removed from the workaday world is enourmous. It's effects upon the remainder of us are equally problematical. One thinks of unemployment insurance as a primary economic drain. However there remain other equally huge ancillary costs, i.e., loss of residences, with subsequent drain on community tax revenues. The eventual increase in medical/medicare costs, is also born by all of us. Business surely suffers when dollars no longer flow from the pockets of the unemployed/underemloyed. All this suggests that the solution is not to be found in continued tightening of the economic tourniquet at all levels, but rather in using the federal pocketbook to rebuild our country at all levels. Think, for a moment, of the cost of one carrier battle group, vis-a-vis repair/replacement of ALL the bridges and roads currently labeled dangerous. To add insult to injury, we now elect politicians, not legislators. Ours is a government of practical compromise. Look at our congress. Do you see legislators, or self-motivated quasi-Talibans? My fellow Americans, I implore you to think for a moment of your children. If you are reading this, you have a tool at your disposal.

KEVIN
July 12, 2012 at 9:52 pm

The enconomic/mental/physical angst experienced by those aged 50 - 62 upon being removed from the workaday world is enourmous. It's effects upon the remainder of us are equally problematical. One thinks of unemployment insurance as a primary economic drain. However there remain other equally huge ancillary costs, i.e., loss of residences, with subsequent drain on community tax revenues. The eventual increase in medical/medicare costs, is also born by all of us. Business surely suffers when dollars no longer flow from the pockets of the unemployed/underemloyed. All this suggests that the solution is not to be found in continued tightening of the economic tourniquet at all levels, but rather in using the federal pocketbook to rebuild our country at all levels. Think, for a moment, of the cost of one carrier battle group, vis-a-vis repair/replacement of ALL the bridges and roads currently labeled dangerous. To add insult to injury, we now elect politicians, not legislators. Ours is a government of practical compromise. Look at our congress. Do you see legislators, or self-motivated quasi-Talibans? My fellow Americans, I imploe you to think for a moment of your children. If you are reading this, you have a tool at your disposal.

Warren
July 12, 2012 at 6:59 pm

Yep, I have been declaired excess and no longer needed 3 times now. Each time the company I enjoyed working for was bought by a giant corp, who already had someone who could do my job.
I now find myself at age 53 and nothing to do, but read free books and take free walks. I do miss work, but not doing that anymore. If you see me on the street with a sign, please donate to my freedom.

Tim
July 12, 2012 at 3:59 pm

I would advise anyone 'waiting around to die' that we are entering a phase in the economic state of the world where the production:distribution equation is collapsing with the effects of automation. You are not alone now nor will you be without substantial company in the future. I started writing software in 1969 (a great game, the best) and at the same time read Vonnegut's first novel "Player Piano" so I got the power of computing coupled with the certain knowledge that what I and many others would be doing would result inevitably in 'joblessness.' If it's any solace to you, I went through my own decade of virtually no income after 9/11... and a miserable period of eighteen months where I was selling what I owned to be able to eat. I finally reached SS age in November (but didn't get the first deposit until 62 days later.) People who have wealth or power of position are going to continue to consider this state as something that is 'cyclical' or a result of (among many many excuses) 'not enough workers who know math or can spell...' there has been a paradigm shift in the works for four decades now. WE DON'T NEED 100% of the POPULATION WORKING TO HANDLE THE NEEDS AND WANTS OF 100%. The institution of the web was a DRAMATIC change in the efficiency of the economy. Hang on and try to work at anything that pays money or doesn't.

dave
July 12, 2012 at 12:14 pm

I was laid off in 2009 at age 50. I have not worked since then.
Between being older and companies not hiring the long term unemployed. I am just hanging around waiting to die.

Cliff
July 12, 2012 at 11:10 am

Its very interesting how things change.I can remember when president Clinton was in office and the economy seemed to be good reading and article where hiring older workers with experience was a plus.

Perhaps that will happen again nothing takes the place of experienced workers that can keep a company growing.