Will Impact of Economy on 403(b) and 457(b) Plans Cause Nonprofit Employees to Delay Retirement?

We previously blogged about possibility of retirement investments of nonprofit employees in the wake of the national financial crisis.  Today’s issue of Inside Higher Education reports that the downturn in the economy may cause many professors to delay retirement because of the impact on their individual 403(b) and 457(b) retirement plans.  Here is an excerpt from the article:

Rhoades cautioned that many of the tools that appeal to administrators, such as buyouts, aren’t necessarily effective at improving institutions. “Often, you see retirement schemes and the people you want to retire don’t and the people you don’t want to retire do,” he said. “It’s hard to fine tune” the programs.

A particular concern, Rhoades said, is the “squeeze on the young generation.” Not only might jobs be harder to find, but institutions are pushing to offer new faculty members less generous health and other benefits than long-time professors.

Looking broadly, Rhoades said, it is important to go beyond the campus level, and for academic leaders to talk about the potential loss for society of a lack of good job opportunities for younger scholars. “What is really needed at the national and state levels is to get out the message that this really important work force is getting old,” Rhoades said. And higher education needs levels of financial support so that institutions don’t respond to retirement delays by killing other positions and benefits. “We need to make sure that we don’t have a missing generation of knowledge generators,” he said.

For the entire article, see “Will Professors Delay Retirements?” in the September 19, 2008, issue of Inside Higher Education.

DAB