Retirement Dreams Disappear With 401(k)s

60 Minutes: Older Americans' 401(k)s Have Plummeted; Many Fear They Will Never Get To Retire

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The effects of the current economic crisis have touched everyone. Even if you still have a good job and a paid up mortgage, chances are your monthly 401(k) statement will remind you that you've lost a good chunk of your savings.

Trillions of dollars have evaporated from those accounts that have become the prime source of retirement funds for a majority of American workers, affecting their psyche and their future. If you are still young enough, there's time to rebuild and recover, but if you are in your 50s, 60s or beyond the consequences can be dire, and its drawing attention to the shortcomings of a retirement system that has jeopardized the financial security of tens of millions of people.

It was a gray, chilly morning in midtown Manhattan and a line of unemployed, mostly white-collar workers, stretched for blocks around the Radisson Hotel. More than 1,000 middle managers, stockbrokers, consultants, secretaries and receptionists had come hoping to find a job.

It was called a career fair, but there was no merriment - only a whiff of desperation.

Many of the people at the career fair have been out of work for months and burned through their liquid assets; their future, even bleaker than the present.

Alan Weir, who turns 60 this month, showed 60 Minutes his latest 401(k) statement, which he hadn't had the courage to open up.

"I'm afraid," he told correspondent Steve Kroft.

There's good reason for his trepidation: nearly half of his life savings have vanished in a matter of months.

"It went down again," Weir told Kroft, after opening the statement.

Overall, he said he was down about $140,000.

Asked if he thought he'd ever get that money back, Weir said. "I probably never see it come back. I was looking to retire, probably, when I hit 62. Can't do it now. I'll probably be working until I'm at least 70."

Until she lost her job, Kathleen Coleman had spent nearly 30 years working as an executive assistant on Wall Street. She doesn't have much to show for it.

She told Kroft her 401(k) was worth less now than it was in 2005. "And another one went down almost $40,000. One was 80 - 88,000. And then, and then it went down to 50(k)," she told Kroft, crying.

Coleman is 54 years old and lives alone. "I don't have any children. I've been a career girl all my life. And it's been a great career, and I don't deserve this," she said.

Asked if there had been some "nibbles" - potential job opportunities - she told Kroft, "All the nibbles I've had I get beat out by top models who can type. I have experience and dedication and loyalty, and I can make any boss shine. I can, if you're out there, I'll relocate anywhere for you."

"Psychologically, what does this piece of paper do to you?" Kroft asked.

"Oh, it crushes any rest I may get when I'm 65. I'll have to work for the rest of my life," she replied.

The saddest part of this story is that it is being repeated all over the country. In eastern Pennsylvania, 59-year-old Iris Hontz lost her accounting job and half of her 401(k) investments. She's now back in the workforce as a part-time cashier in a grocery store.

In Dearborn, Mich., Terry and Donna McNally are barely holding on; he lost his sales job in August. The condo they bought 15 years ago is worth less than their mortgage, and 40 percent of his 401(k) retirement savings is gone. Donna is the main provider now, running a daycare center out of their home.

Terry considers himself fortunate to have found part-time work greeting the bereaved at a funeral home and making lattes at Starbucks, where colleagues young enough to be his grandchildren have taken him under their wing.

Asked what the hardest part is, Terry McNally told Kroft, "I'm no longer sitting at a computer or driving in a car to a call. You know, suddenly I'm standing for four to six hours and greeting people or makin' drinks or tryin' to learn the process and the food business thing, which is very difficult."

"It's tough," his wife added. "But I'm proud of him at his age to be doing what he's doing."

"The 401(k) drop was tremendous, is tremendous at this point in time. And that's where the savings was, you know. That's our hurt right now," Terry McNally explained.

"We can't live our vision of our dream of retirement. That's the worst part. Many people can't," Donna McNally said.

That dream, Donna McNally told Kroft, was to have a log cabin in northern Michigan and live a nice quiet life. "And we can't do that," she said.

Neither one of them thought that they might be able to retire. "Can no longer see that day," Terry McNally said.