Young men and women entering the job market were given a dripping double scoop with two bad flavors. Few new jobs were created during the economic contraction, and workers held on to existing jobs limiting openings and upward mobility.
The recent job report was disappointing with only 96,000 net new jobs, yet the unemployment rate dipped slightly. The common explanation is that many have given up the search. More likely, the upward trend in the stock market has begun to allow a pent up demand for retirement to be realized.
Defined benefit pension plans that guaranteed a monthly annuity at retirement age are increasingly rare. Those plans are not dependent on the success of plan investments. The employer shoulders the risk. More common today are 401(k) and other defined contribution plans. The employee has the risk. Because of sharp declines in the market many could not afford to retire. Not only has the market doubled since March of 2009, but of late it has held most of its gains. People are beginning to overcome economic fear and embrace retirement.
The rise in the market may provide the greatest benefit to those who have not yet begun to invest.
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