While Palome had a successful career, paid off his mortgage and put his kids through college, like most Americans he didn’t save enough for retirement. Even many affluent baby boomers approaching the end of their careers haven’t come close to saving the 10 to 20 times their annual working income that investment experts say they’ll need to maintain their standard of living.
For middle-class households, with incomes ranging from the middle five to low six figures, it’s especially grim. When the 2008 financial crisis hit, what little Palome had saved — $90,000 — took a beating and he suddenly found himself in need of cash. With years, if not decades, of life ahead of him, Palome took the jobs he could find.
The youthful and perennially optimistic grandfather considers himself lucky. He’s blessed with good health, he said. He’s able to work, live independently and maintain his dignity, even if he has to mop the floors at the club before going home at 8 p.m. and getting off his feet.
“That’s part of the job,” he said. “You have to respect the job you’re doing and not be negative — or don’t do it.”
Low-income Americans have long had to scrape by in old age, relying primarily on Social Security. The middle class, with its more educated and resourceful retirees, is supposed to be better prepared, with some even having the luxury to forge fulfilling second acts as they redefine retirement on their own terms.
The reality is often quite another story. More seniors who spent careers as corporate managers and professionals are competing for low-wage jobs. For these growing ranks of seniors with scant savings, it’s the end of retirement.
About 7.2 million Americans who were 65 or older were employed last year, a 67 percent increase from a decade ago, according to government data. Yet 59 percent of households headed by people 65 or older have no retirement account assets, according to Federal Reserve data.
“People who built successful careers, put their kids through college and saved what they could are still facing downward mobility,” said Teresa Ghilarducci, an economist at the New York university the New School who has studied the finances of seniors.
It’s about to get worse for those in the baby-boomer generation, who began turning 65 in 2011 and are reaching that age at a rate of about 8,000 a day. They’re the first generation expected to fund their own retirements, even as they live longer.
They’re coming up short. Company-paid pensions have mostly been replaced by 401(k) accounts primarily funded and managed by employees. The median 401(k) balance for households of people ages 55 to 64 was $120,000 in 2011, according to the Center for Retirement Research at Boston College.
Those savings will provide $4,800 a year, assuming seniors withdraw 4 percent annually, the amount recommended by retirement experts to ensure retirees don’t run out of money in their lifetimes.
It is little wonder that half of baby boomers ages 50 to 64 don’t think they’ll have enough to retire, according to a 2011 AARP survey.
“The current retirement savings systems isn’t working, and that’s becoming a crisis as Americans who make it to 65 in good health are now living at least two more decades,” said Larry Fink, chief executive of BlackRock, the world’s largest asset manager. “Longevity should be a blessing, but if you haven’t planned for it, you’re going to work much longer than you ever dreamed of doing. Or you better be good to your children, because you’re probably going to be living with them.”
That’s the last thing Palome wants. On the job at Sam’s Club, Palome is easy to spot amid the shoppers. It’s not just the bright green apron he’s wearing with “Tastes and Tips” across the front. It’s his charisma and determination.
He waves to a mother with a toddler in tow and insists she sample the blueberry-flavored crackers he has stacked neatly on a tray. “They’re multigrain, and healthier for kids than cookies,” said Palome, who goes online to research the products he pitches.
He’s expected to sell two boxes in his seven-hour shift. He sells 24 by cleanup time.
Job No. 2
The next day, a humid Sunday in August, Palome is at his second part-time job, an eight-hour shift as a short-order cook and bartender at Rogers Park Golf Course in Tampa. Working solo, he’s in perpetual motion, rushing between the takeout counter at the golf course’s cafe and the indoor counter to collect orders and run the cash register, while grilling hot dogs and hamburgers and grabbing soft drinks from the refrigerator. It’s a busy day at the 18-hole municipal course, and he serves 70 customers before closing time. Then he scrubs down the grill and mops the floors.
Palome earns about $80 for his day’s work, $7.98 per hour in wages, plus tips.
“I earn in a week what I used to earn in an hour,” he said, adding that he understands seniors can’t easily keep or get jobs that pay middle-income wages.
Palome could survive without working. He receives $1,200 from Social Security and a $600-a-month pension from his last corporate job. Still, his $1,400 in monthly wages allows him to bolster his savings and provides for some extras. He goes to the theater, pays for plane tickets to visit his family and takes occasional vacations.
“I know seniors like me who hardly ever leave home because they don’t have money to do anything,” Palome said. “They could work but won’t take a lesser job.”
To stretch his income, Palome runs his dishwasher once a week and turns off his water heater after his morning showers. He buys airline tickets six months ahead, booking rental cars for as little as $13.80 a day.
Palome grew up in Poughkeepsie, N.Y. His parents were both immigrants, and his father worked as a laborer. After a stint in the Navy, Palome had a chance to work at an IBM plant. The work was steady, with solid pay and benefits. Instead, he enrolled at Fordham University to study business, relying on veteran benefits to pay tuition. His father was so angry Palome turned down the plant job that he didn’t speak to him for months.
“I knew that anyone who got into that plant never got out,” he said. “You just got stuck because of the steady pay.”
Palome landed a job at Shulton, the maker of Old Spice after-shave lotion and cologne, then moved to Yardley of London as a brand manager. His big break came in 1975 when he was recruited to the Cooper Cos. as vice president of marketing for the Oral-B dental-care business.
The job gave him a high-five-figure income and an executive’s life at age 39. He flew first class to Cooper offices in Britain, Sweden and Germany. He helped win an endorsement for the Oral-B toothbrush from the U.S. Olympic Committee. He had a closet filled with suits and played golf with other executives.
That life turned upside down when his wife, Edna, was killed in a car accident in 1983. Palome’s daughter, then a college student, offered to come home to take care of her brothers, ages 14 and 16. Palome insisted she stay in school. He took charge of the parenting and the housework.
“I was numb, in shock and trying to hold everything together,” he said. “And my sons didn’t want anyone in the house besides me, not even a housekeeper.”
When Cooper relocated from New Jersey to California, Palome didn’t want to uproot his family. So in 1980, at 44, he started a consulting firm, with Cooper as his main client , along with and Sandoz Pharmaceuticals, Johnson & Johnson and others. In flush years, Palome earned about $120,000. Though he saved for his kids’ college and helped his parents, retirement wasn’t on his radar. “I never thought I’d live this long,” he said.
Because he was self-employed, Palome didn’t have a 401(k) account, and he has never had a tax-deferred individual retirement account. It’s the same for most Americans. Only half of private-sector workers were covered by an employee-sponsored retirement plan of any kind in 2011. And fewer than 40 percent of those participated, according to the Employee Benefit Research Institute.
Many approaching retirement began saving too late, or stopped saving when they or spouses lost jobs. They also often chose investments that failed to yield the best results, or they bailed out of the stock market after the financial crisis battered their savings and missed the rebound.
“How is the average middle-class person going to amass $1 million by the time they’re 65, which is what they’ll need to get $40,000 a year in income from their retirement savings?” Ghilarducci said.
Palome’s brother Peter, who is 66, said, “Tom always did what he had to do to keep going.”
Palome later ran a restaurant at a New Jersey golf club while he continued his consulting. At 64, when an 800-square-foot manufactured home he had seen in Plant City, a Tampa suburb, became available for $21,500, he bought it with a credit card to amass frequent-flier miles. He then sold his New Jersey home for $180,000, kept what he needed to quickly pay off his credit card debt and divided the rest among his children so they would have down payments for their own homes. “The house was theirs as much as mine, and that’s their inheritance from me,” he said.
At first, Palome enjoyed the year-round warm weather and he avoided dipping into savings by doing part-time bartending and catering. Then the financial crisis hit. Palome’s part-time work evaporated. His savings, which he’d invested mostly in stocks, shrank from about $90,000 to less than $40,000. “I was shocked by how fast I lost so much,” he said.
‘You ought to know I’m 75’
Palome didn’t panic. He rewrote his résumé, taking out references to his corporate career so he wouldn’t appear overqualified for restaurant and hotel jobs. He searched online job sites and local papers for leads. Between 2008 and 2011, he figures, he applied for about 100 jobs. “I was in a foreclosure city in a foreclosure state,” he said. “So many people were out of work. Who wants to hire a 75-year-old?”
Two years ago, Palome saw an ad for an AARP Foundation job training program. He met with Maxine Haynes, who helped him get an interview at Advantage Sales & Marketing, which runs food demonstrations for Sam’s Club. “He had so much energy and enthusiasm when he walked through the door,” Haynes said.
Palome aced the interview with a spontaneous pitch on how to sell a simple magic marker. Still, he worried that his age would be a deal breaker. “You ought to know I’m 75,” he offered.
“Age is only a number,” Wanice Matthews, Palome’s boss at Advantage, later said. “If I had 10 more Toms on my team, I’d have the best team in the business.”
Every other morning, Palome does 70 sit-ups and 70 squats and almost as many leg lifts and arm strengthening exercises. He alternates his at-home exercises with two or three 10-mile bike rides each week.
At Sam’s Club, his 30-minute break during his 71
2-hour shift is not enough time to prevent backaches and leg cramps after standing all day.
If Palome has one regret, it’s that he didn’t get better retirement investing advice somewhere along the line. “I thought I could do it on my own,” he said.
Still, he’s proud that he built a career in marketing, raised a family after a tragic loss and helped his kids get a start in life.
“I’m not going to sit on my laurels and say I was an executive making six figures and traveling the world,” he said. “I tell people I demonstrate food and I do short-order cooking. I don’t mind saying it. What’s important is that I can work today.”
This article is part of a Bloomberg News special report on the future of retirement.