CINCINNATI (Reuters) - Miriam Gorman wanted to retire more than a year ago, but steep financial losses in her retirement savings mean the 71-year-old bookkeeper now plans to work on indefinitely.
"I would have preferred to retire at the end of 2007, and then I was thinking at the end of this year, and now maybe it's next year. I really don't know," said Gorman, who's been with an advertising company in Bethesda, Maryland, for 15 years.
Across America, older workers are postponing retirement plans, dismayed by huge losses in the value of the investments they had depended on to fund their retirement. The U.S. recession has compounded the problem, with home values too low to provide the nest egg many seniors need and interest rates on safer assets close to zero.
"This combination of forces creates a triple whammy for older people. The stock market is plunging, jobs are hard to find, and home values are sagging. This creates a really difficult environment in which to contemplate retiring," said Richard Johnson, an expert in seniors and retirement at the Urban Institute, a Washington think-tank.
Assets in retirement accounts have lost $2.8 trillion, or 32 percent of their value, as of December 2, 2008, compared with September 30, 2007, according to the institute.
These financial losses have translated to a huge shift in American retirement plans.
A December survey by the senior's advocacy group AARP showed 57 percent of Americans aged 45 or over who lost money in their investments over the past year and who are working or looking for work expect to delay retirement. One in four have already postponed plans to retire, the survey showed.
A separate poll by consulting firm Towers Perrin, also from December, showed nearly two-thirds of U.S. employees believe they face a much greater risk that they won't be able to afford to retire when they want to. In August 2008, 14 percent of those polled said they planned to retire in the next few years. In the December survey, that number dropped to 9 percent.
While bookkeeper Gorman hopes she'll only have to work a few more years to afford retirement, AARP director of financial security Jean Setzfand said it is almost impossible to know how long it will take people to rebuild their savings.
"A lot of it is just determined by how quickly we recover from the downturn," Setzfand said. "The jury is still out."
The AARP advises Americans they will need about 70 percent of their pre-retirement annual income to maintain their standard of living when they quit working.
Gorman expects to be on a tight budget for a long time.
"When I retire, it's going to be tough. I'm going to have to watch every penny and I'm not sure I'm going to make it," she said.
Still, Gorman said she's grateful her good health allows her to keep working long enough to recoup some losses and hopes the economy might improve under President-elect Barack Obama, who takes office on Tuesday.
"Nothing is going to change overnight, on any front. He's coming into a situation that's going to require a lot of time and patience ... but I hope he'll get this economy moving again," said Gorman.
Unfortunately, older workers may be trying to hold onto jobs -- or find less physically demanding new ones -- just as U.S. employers are cutting their workforce. The U.S. unemployment rate rose to 7.2 percent in December, its highest point in nearly 16 years.
"It's a lot easier to work at older ages if you are staying at your existing job," notes the Urban Institute's Johnson. "Those who will be hit hardest by the recession are those with lower incomes, with less education and fewer skills that employers value."
Still, Johnson said statistics are already showing a permanent shift in what Americans think of as "retirement age" -- the notion that 65 was the end of working life. Financial losses, the end of employer-based pension plans and longer life spans mean more seniors are now working much later in life.
"The average age people leave the workforce is still about 64," Johnson said. "But the share of older people in the workforce has been going up since 1998."
In August 2008, 36 percent of men and 26 percent of women aged 65 to 69 were still working, compared with just 26 percent of men and 17 percent of women 10 years earlier.
Nancy Belle is rewriting her own rules for retirement age -- prompted by both financial losses and personal experience.
"I used to think once you hit 65, that's the magic age and it's almost a requirement -- you just retire. As I got older I see that it's not really true," said Belle, a 64-year-old healthcare educator in Baltimore, Maryland.
Belle enjoys her job and expects to work for another three or four years to make enough money to "spoil" her five grandchildren -- one more is on the way -- and recoup a 40 percent drop in the value of her retirement account.
"I'm not going to recoup that in one, two or even three years. I'll be lucky if it comes up at all," said Belle. "But I'm healthy and I find it invigorating to come into work in the morning, so I'm very lucky."
Reporting by Andrea Hopkins; editing by Michael Conlon and Philip Barbara