Trouble ahead: Fewer have retirement funds, more raid them

ANN ARBOR-The proportion of working Americans with pensions of any kind has steadily decreased since 2001, according to a University of Michigan analysis that suggests trouble ahead for U.S. seniors. "We expected to see a decline in the percent of employed workers with defined benefit pensions," said U-M economist Frank Stafford. "Everyone knows they're a thing of the past. But we also found that participation in defined contribution plans declined, going from 33 percent of employed men in 1999-2001 to 30 percent in 2007-2009. And that is the opposite of what we expected." Stafford is the co-author with Thomas Bridges, a U-M graduate student in economics, of a working paper titled "At the Corner of Main and Wall Street: Family Pension Responses to Liquidity Change and Perceived Returns." In the paper, they analyze data from the Panel Study of Income Dynamics, a survey of a nationally representative sample of U.S. households conducted by the U-M Institute for Social Research since 1968. During the period studied, researchers ed the same families every two years, obtaining a continuous look at how changes in the U.S. economy, notably the economic declines after 9/11 and the Great Recession of 2008, affected how families handled their IRAs, annuities, 401(k)s and other financial sources of defined contribution pensions. They found that many families treat these retirement accounts as sources of ready cash for current needs and discretionary spending rather than as sources of income in retirement.