Washington Post columnist Martha M. Hamilton was online Tuesday, June 17 at Noon ET for her final chat to answer questions about financial planning for retirement.

She was joined by Teresa Ghilarducci, economist and author of "When I'm Sixty-Four: The Plot Against Pensions and the Plan to Save Them."

A transcript follows.

Read Sunday's column.

To read past Financial Futures columns, click here.

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Martha M. Hamilton: Good day, and welcome to the chat. It's a special one for two reasons. It is the last chat I'll be doing for The Washington Post. I'm going to continue writing about financial planning for retirement but for the online AARP Bulletin, so please look for my column there. I'm also delighted to have as my guest, Teresa Ghilarducci, an economist with the New School in New York who has written an incredibly thoughtful book about the inadequacies of the workplace retirement savings plans which have largely replaced traditional pensions and how they may leave too many of us with too little income in retirement. Now, a warning--there have been some problems in the room that houses the server for this chat that may result in it being shut down. So, if we come to a screeching halt, it's not your computer. Now, with that mouthful over and done with, let's get started.

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Dallas, Tx.: In regard to retirement and the benefits, I am 35. I have a 401K ($100K+) but I am so unsure of the future, I don't know what to think. The retirement age keeps increasing, Social Security looks like it will become insolvent, however, elderly population will decrease when I hit 65, unless longevity takes off and my father is alive when I am 70 and he is 98! Who knows where medicine will be at this time! Anyhow, my question, in 30 years, what do you think the retirement age will be? And after the next 18 years, when the baby boomers start to die off, what do you think will happen with Social Security? Thank you.

Teresa Ghilarducci: In the first place congratulate yourself for saving so much in your 401(k). Keep up the good work and save every month -- even if you have other needs/desires for the money (who doesn't!). Make sure you are invested in LOW fee vehicles. The vast majority of experts aren't worried about Social Security's solvency and I don't recommend you factoring that in your plans. Based on current projections, you should assume you will live until 98 and that you have will a 50% chance of being able to work past age 67. I think Social Security will continue as is --maybe even stronger -- and it will surely continue to reward people for delaying collecting their benefits. Your benefits go up 8%!!! if you delay, for a year, collecting after normal retirement age.

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Martha M. Hamilton: Here's another question from last week: Rockville, Md.: I must disagree with Ms. Ghilarducci as you wrote about her plan in your column. She claims the tax-deferred 401k is backwards since "the incentives to save are biggest for the highest-income individuals." Yes, anything tax-deferred is a bigger benefit for higher-income people since they pay at a higher rate. This is a problem with the tax rate being higher for higher income - not a tax-deferred savings plan.

If her "guaranteed retirement accounts" with mandatory 5 percent of earnings saved is tax-deferred (as is Social Security), the benefit is still bigger for higher-income people.

Social Security was trying to legislate personal responsibility. It was taking money from people before they could spend it and forcing it into savings. If the Presidents starting in 1980 hadn't "borrowed" from the Social Security trust fund, it would still be strong.

It is not the government's job to "protect" people from their own greed and stupidity. Its job is to provide options for savings (IRA, 401k, etc) and encourage people to save. If somebody wants to raid their 401k before retirement, put penalties to discourage it but don't make it illegal.

The place to start is giving money to the schools to educate people on personal finance so they don't over spend and under save. It IS the government's job to educate.

Teresa Ghilarducci: The government tries to invent "good" behavior through the tax code -- mortgage interest is deducted,etc. If the tax break doesn't do the job of producing incentive it should be scrapped. High income people get the largest tax break but all studies show they would save anyway. So scrap it I say, let's use that money to boost retirement savings.

S0, what about the government's role. I am being practical. The government should make it easy for people not to get ripped -off when they are trying to save for retirement. Hence my plan to let people skip the retail for-profit sector and save for retirement where federal employees have their money -- the Thrift Savings Plan. Social Security is a low cost administrator since they have everyone's record anyway. Let's face it, if old people don't have enough money to retire on, we won't let them starve. So why not have a way now to make sure people save enough?

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Martha M. Hamilton: Also from last week: Washington, D.C.: How difficult do you think it will be to legislate the kind of serious changes to the established tax system that Ghilarducci advocates? Can both political parties find common ground in "creating a new plan"? And if restructuring the tax incentives for businesses, if not for individuals, is too difficult for Congress, what steps can people take to secure their retirement within the existing system?

I'll answer and let Teresa add to it. I think it will be difficult but not impossible. There are serious, thoughtful people across the political spectrum who realize that something has to be done. But there are those who will oppose it, including well-off individuals who would get a somewhat reduced tax benefit and what I called the retirement industrial complex--all the businesses that have been built up as a result of defined contribution retirement savings plans.

Teresa Ghilarducci: The agreement among experts that the tax code for retirement savings doesn't work is fertile ground for change. We got rid of the tax break for credit card interest fairly easily because it made no sense! More people benefit from this change than don't -- less than 5% of tax payers will get less from the plan (on average $1,500 per year and they make over $200,00 per year.) 50 million taxpayers will have retirement savings account that don't have anything now. Politicians have got to be able to make something out of that!

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Martha M. Hamilton: Bethesda: That proposal you described from Ghilarducci sounds exactly like privatizing social security (the gov't takes money from workers and invests it for them in the stock market-- even apparently guaranteeing them a return?). It seems very odd to describe it as a new proposal when it's been around for a while and most people don't like it. Is it somehow supposed to be different because this would be in addition to social security?

Martha M. Hamilton: I should make clear that the question above is one from last week that I saved until Teresa could be here to respond to comments about her plan.

Teresa Ghilarducci: Yikes! Privatizing Social Security is a very bad idea, always was,always will be. I propose that everyone be helped to save in a retirement savings account, not just workers with an employer 401(K) or pension plan. This supplements Social Security.

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Worcester, Ma.:

For the first time I am worried about my retirement as I see the cost of gas, heating, oil and food rise dramatically. I will be 60 in October and plan to work to 66 or 70. I have a job I love and as long as my health stays excellent I plan to stay. I have $300K in my 401K/IRA. I will receive two small pensions totaling about $9500/yr plus social security. I contribute 6% to my 401K and my company matches 4.5%. My current salary is $65K and I will get a 10% raise due to a promotion at years end. My husband is 60 and makes 40K/yr and will retire at 66 because his job is physically demanding. He will also have a two small pensions totaling about $8K/yr.

I don't really have a question just a feeling of dread that everything we have planned for retirement will not come true. We have two second homes and plan to sell our primary residence, pay off our mortgage and then pay off at least one of the other mortagaes maybe both. We would be left in the worst case with a $100K mortgage. But I just feel so uneasy about the future. I do not want to be a greeter at WalMart to make ends meet. What can I do?

Martha M. Hamilton: You're wise to be concerned about inflation, although it sounds like you're doing a great job preparing financially for retirement. One protection against inflation is investing in Treasury's I-Bonds or Treasury Inflation Protected securities (or TIPS). Here's a column I wrote about those investments:

http://www.washingtonpost.com/

And a comparison of the two:

http://www.washingtonpost.com

Teresa Ghilarducci: Your work plans are sound, though your husband may have to retire earlier than 66 and your retirement age depends on both your health and your employer's plans. People don't have complete control over their retirement date. Strive for having no mortgage debt at all, you will need the freedom from a monthly payment.

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Warrenville, Ill.:

I was deeply distressed by your column last Sunday telling us faithful "Washington Post" readers that Sunday's column was your last. For the last two years you have brought me the voice of reason as I try to plan my financial future in retirement. I am going to miss you very much.

Your note indicated that you are going to continue writing, this time for AARP. Where will I find your columns? I "retired" three years ago from a federal government job, but I started a retirement career that originally was part time but that has morphed into full time. (Mainly because my retirement job speaks so totally to who I am as a person.) I couldn't live on what my retirement job pays me. But the psychic and intellectual rewards go beyond mere dollar amounts. One of the great services that your column--and your real-time chats--provided was the context that I need to balance my life. At my age, I realize even more than before how much this balance is worth!

Thanks for the lessons that you've learned in the two years since you took early retirement. Everyone needs to benefit from those lessons--including my 23-year-old nephew who a few months ago married his current girl friend just before joining the U.S. Navy and just before his first child was born.

Thanks again for all your fine work!

Martha M. Hamilton: Thank you. That's very nice for you to say. I'm glad my columns and chats have been helpful to you. You'll be able to find my new column.

I'm glad you've found work that you love, and I hope you'll be able to get your nephew started saving both for that baby's college and for retirement.

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Laurel: I asked Martha this once; I'd like Ms. Ghilarducci's opinion.

In the era of the defined-benefit plan, it was not unheard of for employers to find an excuse to terminate an employee just before they became eligible for their pension. Has the change to portable savings plans changed the nature of pension-driven HR decisions?

Teresa Ghilarducci: That an employer can, in a sneaky way, act in order not pay a pension under a defined benefit plan has been replaced by other sneaky ways employers serve their own interests in portable savings plans. Cheating under the defined benefit plan was rare because it was so obvious. In the 401(k) world the conflicts are more widespread. Employers routinely put their own stock in 401(k) plans. Now, most employers pass on to the employee all fees so they have no interest in choosing the most efficient money manager. Also, very few employers cover all their workers or guarantee 401(k) contributions.

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Atlanta, GA.:

Hi Teresa. I feel that 401(k) plans have become far to cumbersome and expensive to manage. I have just purchased your book and can't wait to read it. What about SEP IRA plans? They are easy to administer, and there's no reporting involved. By the time you factor in the cost of a third party administrator, the plan audits, record keeping fees, etc...you've just about paid for it. Why not give the money you are already spending on admin costs to the employees?

Teresa Ghilarducci: I couldn't agree with you more about the expense of a 401(k). I like my SEP too. SEPs are good for the few of us who have access to low-cost investment vehicles; who know how to invest; who are, by nature, savers; and who are in a high tax bracket so we can take advantage of the nice tax break that comes with SEPs. With these conditions, I have narrowed the list of who does well with SEP-IRAs to just a few of us!

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Baltimore, MD: I'm within a couple years of retirement. I've read about the pro's and cons of immediate annuities. While the thought of giving up control over a portion of my money is disquieting, a never ending stream of income is enticing.

What is a good resource to look at costs and benefits of an annuity with specific parameters? I would want an annuity that adjusts for inflation and covers either surviving spouse.

Martha M. Hamilton: I'll attach a column I wrote about annuities and some shopping tips. One thing you may want to consider is a fairly new type of annuity which you buy now to kick in when you are considerably older, say 85. I'll attach that too.

Here's the info about the longevity annuity and here's the column about the more traditional annuity.

And shopping tips.

Teresa Ghilarducci: We, pension economists, are dismayed that the annuity market has such expensive products. Until the government offers not-for-profit annuities at group rates you will have to rely on the reliable advice of someone who is neutral and competent like a financial journalist or Consumer Reports to wade through the commercial market. Instead of an annuity you also might want to invest in Treasury Inflation Protection bonds as the next best thing.

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Washington, D.C.: Good luck at AARP! I have always enjoyed your columns.

Whenever you have mentioned your daughter's situation, it has always given me a mild bit of Sunday morning alarm.

Martha M. Hamilton: Thank you. I appreciate that. And don't worry too much about my daughter. She is incredibly resourceful and almost through rebuilding her house after Katrina. I feel confident that she'll do alright all the way to retirement and beyond. I hope you'll keep reading the column at AARP.

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Takoma Park, MD: Hi,

First of all, farewell to you Martha and thank you for all your effort. I am considering adding a commodity index fund or ETF component to a well diversified portfolio of 50/50 stocks and bonds. Though this would be a long term holding and only 3-5 percent of our portfolio, I am somewhat reluctant to commit the funds right now given the huge runup in commodities that has occurred recently. I was wondering if you have any suggestions for how best I might make that investment and what index fund/ETF might give me the best exposure to the overall commodity sector.

Thank you very much.

Teresa Ghilarducci: My own inclination is to run, not walk, away from a commodity index fund. When people are selling wedding rings for scrap and stripping copper from monuments you know we are in a bubble. Keep your portfolio in plain vanilla index funds and don't trade much. You'll apt to make more money saving on trading costs and investment fees than you will ever receive by diversifying in a risky asset.

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We will miss YOU!: I for one am sad that you are leaving the Post. I liked reading your down-to-earth messages in financial columns. I also liked that fact that you didn't just preach to us like another Post financial columnist just because "her grandmother didn't do it that way," especially when her advice often doesn't make financial sense! (Guess what, if I'm 70 and interest rates are 3% and I'm getting a tax deduction, I might have a mortgage!)

Martha M. Hamilton: Thanks, and I hope you'll continue to read the column online at AARP. I wrote a column in which I concluded that paying off my mortgage didn't make financial sense for me (low interest rate mortgage, higher interest rate debt and enough income that the deduction mattered), but I think it's good for the Post to have different viewpoints. No one style of advice fits everyone, and Michelle has helped lots of readers get their financial lives in order. Plus, she's a great person.

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Brussels, Belgium:

I am a US government employee overseas, due to retire later this year. In the asset allocation process for investments, how should I treat my defined benefit federal pension? As a fixed income asset? Or ignore the pension entirely in deciding on percentages for stocks and bonds (I buy only mutual funds and ETF's)? Thank you.

Teresa Ghilarducci: Great question and your instincts are correct. Treat your pension as a fixed asset, if it goes up with inflation treat it as a inflation protection bond -- a TIPS.

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Randolph, N.J.: I am between a rock and a hard place. I am taking care of my 84-year-old mother. My eldest daughter has fibromyalgia which limits her to working even though we helped put her thru school to get her masters she is not able to get the job we had hoped because of her illness. My daughter's medications are not all covered and with the gas prices, medication prices, I am going beyond about $500 to $1000 dollars over what I bring in a month for a while now. I could move but I don't want to do that to my mom.

Is there anything you can suggest to help me out?Next year my husband can get a hold of a annuity and that will help with the bills but until then I am so overwhelmed and afraid something will happen to me when these loved ones of mine need me most.

Help.

Martha M. Hamilton: You are in an incredibly difficult situation. I wish I had more to offer, but here are a few thoughts: First, think about shopping around to reduce recurring costs that can be reduced such as phone service or insurance costs. Sometimes we just stick with what we have for years without looking to see if others can provide the same service more cheaply. If you haven't you also should check with your state or county office on aging to see if they have any services that may help you with your mother's care. Also, might your daughter qualify for Medicaid to help with her medical expenses or for Social Security disability? Please email me at hamiltonmartha@washpost.com or martha1hamilton@yahoo.com. I'm going to be working on a column on this type of difficulty, and I may run across additional information that would be helpful.

Martha M. Hamilton: And I forgot to say, find a friend who can give you occasional relief from taking care of your mother, if you don't have someone doing so already, so you can take some time for yourself. Best of luck to you.

Teresa Ghilarducci: Social workers are skilled and trained to help you find the many resources available to you -- and for which your daughter and mother are entitled to -- in the areas Martha outlined. A hospital, your daughter's doctor, a local agency for the aged can hook you up with a professional with such lists. You'll need your husband's annuity for your own expenses.

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Annapolis, MD: The Saudis said on Friday that they will boost production by 200,000 barrels June-July over the 300,000 they claim to have done in May. Why then did oil jump today and what are the factors at work? Supply/demand seems not to be one of them. How have the traders done since Sunday other than to go long when "logic" says they ought to be hedging their bets and shorting oil? Traders follow trends, no? Here it seems that they're creating them.

Teresa Ghilarducci: Since oil prices are in dollars we have to consider the supply and demand for oil and the supply and demand for dollars when we want to understand oil prices. Oil speculators must have decided that the Saudi increase in oil supply wouldn't match the increase in world-wide oil demand; as well as, that the demand for US goods and services by foreigners won't be larger than the demand for foreign goods by US residents. That US consumers buy goods made in China, Mexico, etc. and that we are pouring dollars in Iraq affects the price of oil because it erodes the value of the dollar.

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Rockville, MD: We are retired since 1995. I have the old federal CS retirement, with no SS. I had some SS credits but somehow missed the ten years by a few quarters. Not a big deal. Wife has SS, county school system and some added from the state. We live on about 80% of our pensions take home money.

Zero debt for almost two decades. Accredited investors with none of that income needed, so it is all reinvested. Because we did not fall for the siren song of get rich in real estate, we live in our only house we bought when we married. We wear out all vehicles. Present one is a Prius which gave us big tax credit a year ago.

It can be done! It requires a good dose of I don't need the newest car on the block, and for the cars I do all the mechanical work as well.

Especially important is that we have medical insurance that is immune (we hope) to the private sector leaving their retirees hanging.

Teresa Ghilarducci: Good planning and good spending habits. This might be out of the question given your age, health, and inclination but why don't you consider working the minimum to get Social Security benefits. The quarters don't expire!

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MD: OK - if someone who owns three homes (Worchester MA) is worried about having to become a Wal-Mart greeter in retirement to make ends meet, what are the rest of us supposed to think?

Martha M. Hamilton: That inflation can wreck the finances even of people who have saved and invested and that we need a system that provides more true security for retirement.

Teresa Ghilarducci: The biggest retirement risks that government is well suited to fix without harm to the federal government's finances are these: the inflation and financial risks that workers are now forced to face because of our bad pension system. That is why I propose a way all Americans can save and be guaranteed a risk-free rate of return of 3% plus inflation on their retirement savings.

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Retirement is coming fast and furious.: Thank you for your advice!!

Regarding financial literacy, my summer goal is to set up a checking account for our teenager to use to pay the household bills, e.g., electric, gas, water, car loan, etc. My father had us pay the household bills with his checking account and would drop us off at the grocery store with a list and x amt of $$$ to buy EVERYTHING. We quickly figured out that store brands were cheaper than name brand products.

Retirement planning we would be okay except for health insurance. My goal is to obtain a part-time job that offers medical insurance once I retire from full-time employment.

Martha M. Hamilton: Now that's a reality show that I REALLY like. That's a great way to focus kids' attention on financial management. You're right about health insurance, too. I'm lucky to have at least some health insurance until I qualify for Medicare, but it's costly. We have to do something nationally to bring down health care costs. I know of reasonably well off people who are skipping visits to the doctors that they should be making because the costs are so high.

Teresa Ghilarducci: I happen to be a financial merit badge counselor for the Boy Scouts. I have recommended their $1.50 handbook as required reading for ALL high school students and have used it when I have been honored to speak to teenagers about economics. This booklet which advises a teenager to keep a record of expenses and income, plan their education to get the job they want, would supplement your excellent teaching plan for your teenager. After keeping a budget, many of my boy scouts advisees stopped buying soda pop and music downloads and realized, to their dismay they were working only to pay the gas and insurance of the car they were using to drive to work.

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MD: While I feel for the NJ mom who put her now ill daughter through school, this is a good illustration of why parents shouldn't sacrifice their own retirement and funds to pay for schooling costs. If the daughter had paid for her own schooling or had loans in her name, then there is potential relief if medical disability intervenes later in life (not great relief, but possible via bankruptcy, disability insurance, etc.). Mom and Dad have no such recourse.

Teresa Ghilarducci: The research backs up this advice. Women, in general (I AM ONLY SPEAKING ABOUT AVERAGES) tend to shortchange their retirement goals for an adult child's education.

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For Randolph, N.J.: This person should check directly with the manufacturers of the drugs her daughter takes to see if she can get a reduced price for them, since they aren't covered by insurance. I did that with an expensive drug my mother takes, and we didn't have to prove financial need, only that the drug wasn't covered by insurance.

Martha M. Hamilton: Thank you very much for that useful advice.

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Annapolis, MD: My work has a high fee 401K (2%+ expense ratios). At what rate is it better to use taxable accounts vs. tax-deffered savings.

Teresa Ghilarducci: I love this question. A 2% expense ratio is quite high and probably is near the cutoff point where one's tax savings in a 401(K) are not worth the extra expenses. Yet, if you switch you may lose the employer's match. If this is a 401(k) without an active match then the precise cutoff depends on a person's tax rate and alternatives. A Roth IRA might get you a better return if you think income tax rates will increase in the future (I am betting on it) and you can keep the expense ratios low in a Roth IRA.

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Atlanta, Ga.:

Really, it's great that some companies, who want to recruit well, offer pensions. But a company is there to provide a service or something to a customer - and they are not there to take care of their employee from cradle to grave. Why do people think their employer's job is to take care of them? One is there to do a job, and get paid for it, you don't like it, leave.

Like - most companies are NOT in the financial services business, but in order to provide pensions, it seems as if they must be. If that were the best use of the company's time, then they would be in that business.

People need to take charge of their own lives and not expect others to take care of them.

Teresa Ghilarducci: I agree the employers won't be able to guarantee cradle to grave security. That is why most defined pensions are fully funded. The government has to make it easy and sensible for people to take personal responsibility. That is why I am proposing that people be mandated to save for their retirement in a not-for-profit guaranteed account.

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Bob:

The federal reserve declared a Jihad on the U.S. Dollar commencing in Jan 2002 when it turned on the printing press.Was it a deliberate premeditated action taken to transfer baby boomer accumulated wealth from our generation to federal coffers?

Euro to US Dollar (/EURUS) -