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The Economy Slows, but Some Save More for Retirement
Tweet Share on Facebook June 25, 2008 Comment (2)You'd think rising gas and grocery prices might cause workers to skimp on their 401(k) contributions. But that's only half correct. The faltering economy has some Americans saving less and others tucking away more for retirement. At least that's the confounding result of a new survey.
While it's unsurprising that 15 percent of people in IRAs and workplace retirement plans have lowered their contributions and 73 percent kept theirs the same, a surprising 16 percent say they have actually increased the amount they're saving as a result of the current economic downturn, found a Bankrate.com survey of 1,004 adults done by GfK Roper Public Affairs & Media.
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Avoiding Bankruptcy in Old Age
Tweet Share on Facebook June 24, 2008 Comment (7)More than a million Americans found themselves unable to deal with their debts last year and filed bankruptcy. Older Americans on fixed incomes are often hit hardest by debt. People 55 and older accounted for 22 percent of all those in bankruptcy proceedings in 2007, up from only 8 percent in 1991, according to a new AARP Public Policy Institute paper.
Bankruptcy rates generally dropped after the bankruptcy law was amended in 2005 to make declaring yourself insolvent more difficult. But "the financial condition of seniors is serious enough that they are going bankrupt anyway," says University of Michigan Provost Teresa Sullivan, a coauthor of the paper. For most people who declare bankruptcy, she believes, "it's not the case that they have done something wrong. It is that something has happened to them that they didn't foresee."
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Traditional Pensions Net Higher Stock Market Returns
Tweet Share on Facebook June 23, 2008 Comment (2)During the bull market of the late 1990s, 401(k) plans outperformed traditional pension plans. But this decade has brought a reversal of fortune: During both the 2002 bear market and the 2003-2006 bull market, traditional pension plans outpaced 401(k)'s, according to an analysis by consulting firm Watson Wyatt Worldwide.
The study of companies with both a defined-benefit (traditional) retirement plan and a 401(k) plan found that traditional pension plans beat 401(k) results by 1.6 percentage points in 2006. Money invested at the start of the 12-year period from 1995 through 2006 was worth nearly 14 percent more in the traditional pension plan, Watson Wyatt found.
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Stories of Unplanned Retirements
Tweet Share on Facebook June 20, 2008 CommentSudden illness or a layoff can instantly change your retirement plans. I've been writing about how some retirees and older workers coped with health problems, job loss, and care-giving responsibilities. Here's a recap of the stories told so far:
- Forced Into Early Retirement From Corporate America
- Cutting Back on Work to Take Care of Mom
- Second-Career Plans Scuttled by Illness
- Retiring Into an Uncertain Job Market
- Keeping Busy to Ward Off Alzheimer's Disease
- Picking Out a Job for the Pension
- When Illness Ambushes Retirement Plans
If you'd like the story of your unplanned retirement featured in an upcoming post, please write me at retire@usnews.com. Include your phone number. Or you can discuss your story in the comments section.
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Sudden Illness Caused Paulette Geller to Retire Young
Tweet Share on Facebook June 20, 2008 CommentPaulette Geller, 64, planned to work until 66 or 67, to boost her Social Security check. (Social Security benefit amounts are based on a person's top 35 years of working income and increased for each year one delays claiming up until age 70.) Then, after successful foot surgery, she was being wheeled to her car to go home when she had a stroke.
The stroke caused Geller to lose some technical skills and vision, keeping her from continuing to work as program director for older adults at the Winter Park (Fla.) Health Foundation. "I honestly thought I wasn't going to ever stop working. I was going to cut back to half time or quarter time because I loved my job," Geller says. Suddenly, "I couldn't do my job anymore, but it wasn't on my timeline and I wasn't in control."
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Carrying Mortgage Debt Into Retirement
Tweet Share on Facebook June 20, 2008 Comment (4)I was brought up with the wisdom that paying off your mortgage as soon as possible was the surest way to accumulate wealth. But a new study says there is no longer a stigma to carrying mortgage debt into retirement, at least for folks with plenty of money.
A survey of 500 affluent baby boomers born in 1948 by investment management firm Bell Investment Advisors found that 55 percent who have both mortgages and investable assets of at least $1 million do not plan to pay off their mortgages until their 70s, if ever. "Contrary to conventional wisdom, mortgages can actually be a wealth-building tool for boomers throughout their retirement years," says Jim Bell, founder and president of the company.
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Picking Out a Job for the Pension
Tweet Share on Facebook June 19, 2008 CommentWhen Luann Alshiemer, 49, of Utica, N.Y., chose to become a police officer, she was already thinking about the retirement options. She would be eligible for a full pension after 20 years with the force. "People thought I was crazy when I took the job at the police department," Alshiemer says. "I saw my parents live paycheck to paycheck, and having seen that, I think you really have to think jobwise about retirement and what you are going to do."
That foresight paid off when Alshiemer started getting severe migraines that forced her to retire in early 2004 at age 45, at which time she was eligible for the full pension. "My doctor didn't really give me much of a choice," she says. It took her a tumultuous year to get the migraines under control and also take care of her mother, who had developed cancer.
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Older Workers Find 'Encore Careers' Helping Others
Tweet Share on Facebook June 18, 2008 CommentThe most common jobs for people who work after age 65 are in the retail industry. But a survey released today says that baby boomers are changing that stereotype by finding jobs that not only pay the bills but provide personal meaning and have a social impact.
A telephone survey by the MetLife Foundation, Civic Ventures, and Peter D. Hart Research Associates found that almost 10 percent of those between the ages of 44 and 70 are already in "encore careers" that provide them with a sense of purpose and accomplishment—a figure the researchers estimate translates to between 5.3 million and 8.4 million older workers. Typical fields include education (30 percent), healthcare (23 percent), government (16 percent), nonprofit organizations (13 percent), and for-profit businesses that serve a public good (9 percent).
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Keeping Busy to Ward Off Alzheimer's Disease
Tweet Share on Facebook June 18, 2008 Comment (4)Jim Cook, 57, of Lincoln, Neb., had a 28-year Air Force career and then worked as a guest lecturer for the University of Nebraska. But little by little, important memories that he needed to do his job started to elude him. "My personal stigmatization was not being able to remember people's names. Fifteen minutes into the conversation, I would forget someone's name," he says. "I was less able to manage the small details that were so fundamentally crucial to my being able to do the work."
Cook's job performance reviews began to steadily decline. Eventually, "I was kind of forced into retirement three years ago," Cook says. "At the time, I thought it was just a matter of office politics. A lot of us lose our jobs." But then came the medical diagnosis: Alzheimer's disease.
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Retiring Into an Uncertain Job Market
Tweet Share on Facebook June 18, 2008 Comment (4)Many people forced or enticed into retirement earlier than planned have to find a new job to "cheer up your 401(k)," as Susanne Johnson, 62, of Long Grove, Ill., puts it. When she was 56 in 2002, Johnson accepted an early retirement offer from United Airlines. The airline was going into bankruptcy and the retirement plan was underfunded, so she was afraid she would get nothing if she didn't retire. The package included inexpensive health insurance until she became eligible for Medicare, free or low-cost flights when space is available, and a reduced pension. "You can't live at the level that we're living at on it," Johnson says of the pension.
Johnson then got another job doing information-technology procurement for a bank but was laid off in a merger when she balked at relocating. Johnson would like to work until age 66, when she can get her Social Security "full boat," but for now she's networking and job hunting. At job interviews, "every situation I am asked about I have already faced in my career," Johnson says. "I [would] bring a lot of knowledge to the company that a lot of people in their 20s don't have."
This blog post is part of an ongoing series of stories about people who retired while they were making other plans. If you'd like the story of your unplanned retirement featured in an upcoming post, please write me at retire@usnews.com and include your phone number. Or you can discuss your story in the comments section.
