With just eight years to go, Steve Derebey had been eyeing his mandatory retirement age with something close to relief.

A commercial airline pilot, the 52-year-old would not be worrying "about guys behind [him] with box cutters," he said. Just as important, his $66,000-a-year pension would leave him and his wife, Jeane, free to travel from their home in Gig Harbor, Wash., to visit the grandchild in Crystal Lake, Ill., that is due in January.

But last month, in a Chicago bankruptcy court, United Airlines almost certainly changed the rest of the Derebeys' life, warning that it will likely dump its pension plan onto the federal government. Under the rules of the federal Pension Benefit Guarantee Corp. (PBGC), Derebey would be left with $22,000 a year, a third of his expected benefit. Now, he and his wife are hastily planning a second career, a long one, they say, maybe running their own public relations shop in Seattle.

"Instead of being able to retire, see our kids, we're probably going to have to work until we die," Jeane Derebey said.

The Derebeys' misfortunes are part of a phenomenon that is reshaping the financial landscape for America's retirees. As the baby boom generation retires and people live longer, both Social Security and privately funded pensions -- the two basic legs of American retirement income -- are under increasing financial pressure.

Yet beyond a vague debate over the future of Social Security, neither President Bush nor Sen. John F. Kerry (D-Mass.) have made much mention of looming pension and savings problems, despite pleas for federal intervention from unions, employers and even the PBGC itself.

"Go onto the Bush and Kerry Web sites, looking for the word 'pension,' " said James A. Klein, president of the employer-backed American Benefits Council. "You don't see a heck of a lot."

It is an issue, however, that could land in the lap of taxpayers -- and the next president. The collapse of the stock market bubble cut the value of many pension fund investments, and left company-funded programs scrambling to meet the demands of an aging workforce. The PBGC, the federally backed insurer of pension funds, is having to raise its premiums to cover the cost of defaulted programs, putting the plans that remain under even more financial stress.

"There is a possibility of a looming train wreck that could cost the taxpayers of America untold billions of dollars," Senate Commerce Committee Chairman John McCain (R-Ariz.) warned last week.

The pessimism is widespread among labor unions and business executives alike.

The traditional pension systems that once guaranteed a retirement income until death are in sharp decline. The airlines are only the latest industry to begin dismantling their plans. Between 2001 and 2003, 16 steel companies terminated their pension plans, leaving 256,800 workers, retirees and dependents at the gates of the Pension Benefit Guarantee Corp. Just this week, the PBGC announced it would take over the pension plan of Kaiser Aluminum.

The domino effect may be in full swing. As more company plans go under, the PBGC has had to steadily raise the premiums it charges to insure company pensions, from $1 an employee in 1975 to $8.50 10 years later, to a charge today of $19, plus a variable premium for troubled companies that can push per-employee costs to more than $60, said Sylvester Schieber, vice president of research and information for the consulting firm Watson Wyatt Worldwide.

It still has not been enough. PBGC Director Bradley D. Belt said last week that his agency's deficit for the fiscal year that ended Sept. 30 would eclipse the previous year's record $11.2 billion deficit. A slew of bankruptcies could leave taxpayers holding the bag.

"The longer-term solvency of the pension insurance program . . . is at risk," Belt told the Senate Commerce Committee.

Deficient as they are, those rising premiums are one of the factors pushing traditional pensions toward extinction, Schieber said. In 1978, there were 128,401 such pension plans covering nearly 41 percent of the private-sector workforce, according to the nonpartisan Employee Benefit Research Institute (EBRI). Now there are 26,000, covering just under 17 percent.

In their place have come 401(k)s and other defined contribution plans, where risk is shifted from employer to employee, and contributions are fixed but benefits are left to the markets to determine. The number of such plans has swelled to 840,301 from 314,592 in 1978. About 42 million workers participate in such plans, far more than ever enjoyed a traditional pension.

But with that shift has come uncertainty.

Last month, EBRI found, average 401(k) balances had grown by 17 percent since 1999, despite the shocks to the stock market that knocked total stock prices down by $7 trillion -- or 42 percent -- between 1999 and 2002.

But by the end of 2003, the account balances of experienced workers in their fifties -- the ones closest to retirement -- were 9.3 percent lower than they were four years before.

Meanwhile, savings rates have drifted downward, and the percentage of Americans who are saving has stagnated. An annual survey released by EBRI this spring found that 45 percent of all workers had total household assets, excluding the value of their homes, of less than $25,000.

Since the 1970s, the trend among American workers has been to retire earlier, but in recent years that has started changing. In 2001, 31.9 percent of Americans older than 54 were working. Now, 34.6 percent are.

"What's striking is that the numbers had been fairly stagnant; if anything, through the '70s, '80s, and early '90s, people were retiring earlier," said Dean Baker, co-director of the Center for Economic and Policy Research. "Then suddenly we got this amazing reversal."

At 57, U.S. Airways pilot David Butterfield faces mandatory retirement in three years, but he figured it would be a prosperous one, with a pension of $110,000 a year, a stay-at-home wife and a second home in San Diego calling. For almost 30 years, he has been leafing through the pages of Cruising World magazine, dreaming of the sailboat that would occupy his retirement days.

But U.S. Airways' first bankruptcy sent his pension fund into the lap of the federal government. His annuity dropped to $45,000 a year, but the company promised to help pilots with a rich lump-sum payment of $350,000 to $400,000.

Then last month, U.S. Airways slipped back into bankruptcy. A new round of cost-cutting will all but obliterate that lump-sum payout, Butterfield said. Until Medicare kicks in, roughly $10,000 of the $45,000 left of his pension will go to the health plan that will no longer be available to retiring pilots.

Now, he and his wife are looking for work. Maybe, he said, he could be a medical technician. Maybe he could sell his experience in the Naval Reserves to a defense contractor.

"I basically have three years to retool," he said with a shrug.

Such adjustments can be particularly wrenching, said Duane Woerth, president of the Air Line Pilots Association, the pilots' union. They hit older workers, who have the most difficulty retraining for a new career and who have the least time to build up savings. Workers with defined benefit pensions may have structured their whole lives around that expected payout.

"Everything you've done in your life to date, what kind of home you live in, what your wife does, where your kids went to college, it may all be built around that pension," he said. "This alteration is like an earthquake. It changes everything."

Jim Roberts, 56, said he probably would not have retired early from the Bethlehem Steel mill in Steelton, Pa., if he had known that in December 2002, his $24,720 annual company pension would become a $14,904 annual pension from the federal government. Now, he said, the thermostat stays down, the car stays parked unless a trip is absolutely necessary.

"I can't remember when the last time I bought beef was, outside a hamburger," he added.

There is something particularly poignant -- and painful -- about a broken pension promise, say those who have lost theirs.

"It makes me angry that a large company can, through the use of bankruptcy law, void the moral obligations that it previously made, just with a stroke of a pen," Steve Derebey said. "That's wrong. They may be financially bankrupt, but this makes them morally bankrupt as well."

But in the case of pensions, union and company officials agree on the cause of the recent decline, and the cause has been largely out of the companies' hands. The bursting of the stock market bubble sent the value of pension fund assets crashing, quickly turning overfunded pensions into underfunded pensions.

Government regulations mandate that companies assume a very conservative rate of return on pension fund assets, tied to the 30-year Treasury bond, and base their fund deposits accordingly. But with the stagnant economy has come record low interest rates, which have required ever larger pension fund deposits just when companies could least afford them. General Motors and Ford Motor Corp. have had to borrow billions of dollars to keep their pension plans afloat.

When United filed its planned pension termination papers, executives told employers, "The Company fully appreciates that the men and women of United Airlines have been counting on receiving the pension benefits that they indisputably have earned through years of hard work. . . . But United's world has changed."

Meanwhile, in a global marketplace, U.S. companies are forced to compete against European companies, whose governments assume the burden of generous pension plans, and developing countries with no pensions.

"You've got U.S. employers trying to compete on cost and quality, and they find they simply cannot afford to provide the type of retirement benefit they would like to have and still pay the wages the worker demands," said Martha Priddy Patterson, a director of employee benefits policy at Deloitte Consulting LLP. "It all boils down to money."

The shakeout, she said, has been "very, very painful."

Pilot Steve Derebey, with wife Jeane, was looking forward to his retirement from United Airlines until recent news about his pension.