Since the start of 2007, workers in Hampshire and Franklin counties lost an estimated $1.6 billion from retirement savings accounts due to Wall Street's collapse, a Gazette analysis shows.

The Valley's loss is part of an estimated $2 trillion decline in pension assets over the past year and a half, as calculated by the U.S. Congressional Budget Office.

And with Wall Street still staggering, losses have risen significantly since that calculation was made.

If that $1.6 billion were converted into $1 bills and stacked in a single pile, the money Valley employees have lost in their retirement funds would stretch 110 miles into the sky.

Based on numbers provided by the Federal Reserve, budget office director Peter R. Orszag told the House Committee on Education and Labor Tuesday that the decline in the value of financial assets cost pension funds about 10 percent, roughly $1 trillion, from January 2007 through January 2008.

Over the last nine months, values plummeted again by another $1 trillion, Orszag said.

In the Valley, about 45.8 percent of the working population, or 52,997 employees, have employment-based retirement plans that are being affected by market losses, according to the Employee Benefit Research Institute.

Valley workers make up 0.08 percent of the nation's workforce with retirement plans and thus had an estimated equivalent 0.08 percent share of the $2 trillion retirement fund decline since January 2007.

The average Valley worker with a retirement plan lost $30,190 from savings over the past year and a half. This figure does not take into account differences in years worked or salary, which are major contributing factors to how much money is held in an individual's retirement fund.

The decline in retirement funds is expected to have the greatest impact on people nearing retirement age, typically age 65.

Despite their losses, retirement professionals say people should not pull their retirement savings from the market. Retirement losses can be regained once the market turns around, said Patrick Brock, chairman of the Hampshire County Retirement Board.

"You've just got to sit still because it's the wrong time to sell. You don't want to lock in those losses. Right now it's just on paper," Brock said of retirement assets. "You've got to expect the value of that fund will again return to the normal level and you'll get your normal return."

However, it is unclear how long it will take the nation's economy to improve. Older workers may have to remain part of the workforce longer than they anticipated in an effort to regain assets lost in the ongoing economic downturn.

"That's the crystal ball question," said Jean Setzfand, director of financial security for AARP, an advocacy group for people age 50 and older.

"All indicators tend to point to longer than a kind of short-term downturn ... All the things I've heard is that it's going to take a very long time to unwind and get back on the road to recovery."

Workers who were considering retirement in the next year may have to reconsider, Setzfand said. Although people with Social Security benefits and state or municipal pension plans are expected to reap their guaranteed retirement benefits, these benefits typically are not enough to cover living expenses in retirement.

"It's not enough to fund your retirement, it's a base, and usually people depend on savings and other income and certainly their savings, which are all being affected right now," Brock said.

Retirement funds with payouts dependent on the market will need time to rebound. More time in the workforce could give retirement funds a chance to return to adequate levels, Setzfand said. Older workers can do this by staying with their current employer longer or by taking a part-time job after leaving their original career.

"Everyone can give themselves that time to recover. There's a couple different ways you can do this some are just more painful than others, of course," Setzfand said.

"When you extend your work life, you're still putting money into your (retirement) account and at the same time you're delaying the depletion of it," she said.

Setzfand also recommended people start savings accounts to supplement retirement income. However, Setzfand acknowledged that fewer people will be able to save at an appropriate level. Citing a recent AARP study, Setzfand said 13 percent of Americans age 45 and older are tapping into their retirement accounts, or other investments, to cover day-to-day expenses.

The same study found that 20 percent of people with retirement funds have stopped contributing to them in the last 12 months.

"People shouldn't be doing this," said Setzfand, "but it's hard to make the argument against it. What do you do? It's either buy my medication now or put (money) away for my security five years from now. That's hard to do."

Kristin Palpini can be reached at kpalpini@gazettenet.com.