Will You Retire?

By Nancy Trejos
Washington Post Staff Writer
Wednesday, October 15, 2008

Jan Fitzsimmons had the luxury of being able to retire at 47 after 22 years of service with the U.S. Navy.

But retirement turned out to be not so luxurious.

Now 52 and renting an Arlington townhouse, she is looking for part-time work because life has become too expensive. Her grocery bills have gone up. So have her telephone and cable bills. Health insurance, too, is getting costlier.

"Oh yeah, I'm feeling the pinch," she said. "I'm seeing all my investments go down and the cost of living go up."

Many retirees and soon-to-be retirees are reckoning with a new reality: It's just too difficult to live on a fixed income when the price of everything is edging up. At a time when they need more money because of longer life expectancies, many are facing a retirement with less because the wildly fluctuating stock market has depleted 401(k) plans and individual retirement accounts. Meanwhile, more and more employers are moving away from defined benefit plans, such as pensions, in which they guarantee workers a certain amount of money for retirement.

As a result, Americans are increasingly postponing retirement or getting part-time or even full-time work in other fields after retiring.

"Clearly there's a lot of angst around the notion that the economy is making people's 401(k) portfolios be less than what they anticipated, and therefore, the need to postpone retirement is more imminent than before," said Deborah Russell, director of workforce issues at AARP, the nonprofit organization that represents the interests of people 50 and over.

The percentage of older people in the workforce has been rising steadily since the late 1990s after hitting historic lows through the 1980s and early 1990s, according to the U.S. Bureau of Labor Statistics, which is expecting that trend to accelerate. By 2016, the bureau predicts that the number of workers age 65 and over will soar by more than 80 percent, accounting for 6.1 percent of the total labor force. In 2006, they made up just 3.6 percent of active workers.

Older workers are increasingly more comfortable with the notion that traditional retirement might not be in store for them, the AARP has found. According to a survey released by the organization in September, seven in 10 older workers expect to be employed in retirement, mainly part-time. Sixty-four percent of those workers cited current financial needs, such as health care costs, as the primary reason for working, while another 11 percent said future financial security is what's driving them. Another AARP survey released in April showed that 27 percent of older workers had postponed plans to retire because of the economic downturn.

"If we had $2-a-gallon gas and there were no foreclosures and life was good, I think people would probably favor traditional retirement," said Bob Skladany, a human resources consultant and vice president of research and certification for RetirementJobs.com. "I think we've hit a turning point. Expenses won't change. People don't hope to die sooner, so people will work past retirement."

Although many employers are scaling back on hiring because of the anemic economy, others in thriving fields such as health care are recognizing that a brain drain could happen if baby boomers eligible for retirement actually settle into lives on golf courses. Fearful that they wouldn't have enough younger workers to replace them, the prospect of being able to hold on to their trained workforce is appealing, so much so that they don't mind the potentially high health care costs that come with an aging population.

"They're dependable, they're committed, they bring a stabilization to our environment," said R. Virginia Smith, Wal-Mart's senior manager of diversity relations for mature markets. She said the company employs more than 355,000 workers over 50, and even as old as 103, in its stores. The company has about 1.2 million employees.

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