Retirement's Unraveling Safety Net

Retirement experts say the three-legged stool has only two legs for Paugh's grandchildren's generation: Social Security and 401(k)s, which are like a merger of pensions and savings. Jessica's position at Sears comes with a 401(k) into which she tried to put 7 percent of her paycheck, although she said she recently cut back to 3 percent because she couldn't pay her expenses. "If I didn't use my credit card, I wouldn't have eaten some weeks," she said.

Jessica is the only descendant of Junior Paugh to go to college so far. Her parents didn't give her a choice. "They raised me to see college as inevitable, part of being prepared," she said. "Skills are the key. It's in the job description for my position -- you need a college degree." Yet another child-rearing expense Junior Paugh did not face.

If Jessica's career goes well and the stock-market cooperates, she could end up as secure as her grandfather is in old age. But for now, even with her recent promotion to assistant manager (salary: $26,000), she and her parents are not counting on it. Her 401(k), now with a balance of $6,000, could reach $308,000 by retirement, according to a calculation provided by the plan, but this is well short of what economists say she would need. She said she hopes to invest more and see more gains.

"I check my balance online every other week," she said. "I have half the money in safe investments. With the rest I'm taking risks, just saying, 'Go! Go! Go!' "

Jessica said she believes firmly she never will be able to afford a house. Her cousin Pamela, who rents an apartment with her husband in Harford County, says the same. And her three younger cousins -- Doug's children -- have yet to move out on their own. As their parents see it, this is another wobble in the next generation's retirement security stool.

"We did as well and in some ways better than our parents," Melanie said. "I don't see how our kids will."

But Jessica and Lindsay, for their parts, are too optimistic to imagine things won't ultimately go their way, and too young to imagine ever being old.

"In my mind, right now, retirement is a myth. It may exist, but I can't see that far. I have my 401(k), so I'm preparing," Jessica said.

Pamela, the answering service supervisor, sees it differently. On a recent day, when Pamela's 11-year-old Ford Probe broke down, Junior Paugh made the hour-long drive to pick her up and take her to work. A starker contrast in two people's relationship to their government and employers would be hard to conjure.

Here was Junior Paugh at the wheel of his silver Buick LeSabre, having moved out of poverty, into the middle class, and now a secure retirement, with the help of one employer and his government. And here, only two generations behind him, sat Pamela Cody, feeling abandoned by everything her grandfather valued.

"I see how my grandparents were able to get by, but my husband and I just struggle from paycheck to paycheck," she said. "I don't have a pension and I'm not expecting Social Security to hold up long enough for me. Where is all the government's money going? Who is it benefiting? Nothing is benefiting me."