Another threat to the economy: Boomers cutting back

Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.

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“If these rates stay as low as they are, then a lot more people are going to be hurting,” says Jack Van Derhei, research director at the Employee Benefit Research Institute. The non-partisan outfit estimates that if current conditions persist, nearly three in five baby boomers will be at risk of running short of money in retirement. “There are going to be many luxury items that will simply have to be eliminated,” for retirees to make ends meet…

With the overall unemployment rate hovering at 9.5%, many older workers have now found themselves at the back of the line to return to the work force. “Many employers seem to think it is not worth their time or effort to train me in a position,” says Kathleen McCabe, 59, a former apartment manager in Tulsa, Okla., who has been out of work since April 2009. “They assume I will leave for retirement soon.”

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