With a rising number of corporate bankruptcies, many American workers are facing job losses and reduced pay and benefits. But one of the benefits that corporate bankruptcy threatens is retirement funds mostly in the form of a pension or 401(k). There’s an interesting editorial in the Star-Telegram that calls for the “renegotiation” of how retirement is funded, suggesting that companies may consider dumping pensions.
But will this threaten the income of those already in retirement and/or those workers who are nearing retirement? Many senior citizens have not effectively used 401(k)s to save for retirement and those who are lucky enough to have a pension, depend on it heavily.
What I have seen is more seniors facing bankruptcy has their 401(k) investments lose value or they face significant income cuts because their former employer has filed bankruptcy and relieved themselves of their pension obligations. The author of the article gives an excellent example of what can happen when bankruptcy affects retirement income.
The article said:
For employees, pensions have become a mixed bag. When they work as advertised, they play a vital role in the retirement of millions, helping to supplement Social Security and personal savings. But in the airline industry alone, 228,400 workers had their pensions dumped after employers couldn’t pay them. Thirty percent are getting less than they were promised, and some pilots are getting 75 percent less, according to a September 2008 report by the Pension Benefit Guaranty Corp.
Unfortunately, lost income from pensions is a side effect of some corporate bankruptcies. Retired workers who depend on this income to pay their daily expenses and debts are forced to scramble to save themselves from sinking financially. That’s why many of these retired workers experiencing reduced payouts from their pension plans are turning to bankruptcy to discharge many debts and save their assets from seizure by creditors.
If you are struggling to stay afloat financially in your retirement years, bankruptcy may help you discharge or repay your debts with favorable terms. Contact a Dallas-Fort Worth bankruptcy attorney to find out how bankruptcy can help you.