Wednesday, May 30, 2007

Workers giving retirement the boot

Workers giving retirement the boot
By Jonathan Peterson, Times Staff Writer
May 30, 2007

Every morning, a trusty alarm in his own head wakes up John Feyk before 5. Less than an hour later, he is stepping into the white commuter van that drives him 20 miles to Aerospace Corp. in El Segundo.

He has worked there for almost half a century.

"It does get to be more of a strain getting up at 5 in the morning," said Feyk, 79. But retirement, he added, is something he has given little thought to over the years.

"I didn't decide not to retire at 65," said Feyk, a chemical engineer who lives in Rancho Palos Verdes. "You have to decide to retire."

A growing portion of the U.S. workforce seems to agree. After falling for more than 100 years, the retirement age chosen by working Americans is edging up once again, and the trend could have broad consequences for households and the economy.

In the mid-1980s, just 18% of people in their late 60s still had jobs, the Bureau of Labor Statistics said. That figure is now up to 29%, and experts believe the level will continue to rise as people confront the prospect of a lengthy and expensive old age with limited retirement benefits. More than 1 in 4 baby boomers — the huge generation born from 1946 to 1964 — plan never to retire, a recent survey by the National Assn. of Realtors shows.

Many will not achieve that goal. Health problems and workplace pressures such as cutbacks force many workers into retirement earlier than they expect. And employers that have a choice often prefer the young, viewing older workers as costly and resistant to new technologies.

Despite that, more older Americans are pulling paychecks, a shift that is increasingly noticeable among people in their late 60s.

The trend "is really quite dramatic, considering what was going on for so long before that," said Sara Rix, a strategic policy advisor at the AARP Public Policy Institute.

For many years, society made it increasingly easy to stop working. Social Security retirement benefits were repeatedly enhanced after World War II. The advent of Medicare in 1965 helped pay the medical bills. Large employers typically offered pensions that guaranteed set payments for life.

Today's workers face a more hazardous landscape. Traditional pensions are increasingly rare. Companies are cutting back retiree healthcare benefits.

Even the bulwark of Social Security is quietly retrenching. The traditional age of 65 to qualify for full retirement benefits is gradually moving upward — workers born in 1960 and after will have to wait until they are 67 to get their full amount. In the coming years, more Social Security benefits will be subject to income tax, and higher premiums for Medicare Part B (which covers certain medical services) will further erode benefits.

These growing financial pressures may hit baby boomers particularly hard. As much as 80% of this group expects to work during what would normally be their retirement years, according to polling by AARP. Meanwhile, legal barriers to work for older people are largely a thing of the past. In 1986, the government outlawed mandatory retirement for most jobs.

"I'm not sure when I would want to retire at this point," said Claudine Welsh, 60, a Corona resident who works for a benefits administrator. She is thinking about taking on a second job and expects to work for at least seven more years. "Basically, it's because of money."

Welsh, who is single, has no private pension, and her 401(k) balance is $10,000. Home equity is key to her future economic security — she co-owns two houses with relatives. Beyond that, she views work as an important part of life and talks about one day opening up a coffee shop with her older sister.

Otherwise, "what are you going to do with all that time?" she asked.

And there could be a lot of that. For a married couple of 65-year-olds, the odds are 83.7% that at least one spouse will survive to age 85, according to the Society of Actuaries. Chances that one will live to 90 are 63%, and chances that one will reach 95 are 35.7%.

Ten years ago, the typical age of retirement for all U.S. workers was 60, according to the Employee Benefit Research Institute. Recently, it has risen to 62 overall, a shift that researchers believe may be partly tied to the increasing reliance on 401(k) plans and the decline of traditional pensions that guaranteed monthly payments for life.

The trend could potentially have a big effect on society, putting more money in the pockets of the elderly and even giving the economy a boost, as more workers continue paying income taxes in their golden years. Research by analysts at the Urban Institute suggests that if all workers added one year to their careers, it could markedly reduce the projected shortfall in Social Security.

"It's a direction we have to go in," said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. "You can let your 401(k) plan build up some more. You can reduce the period that you have to live off your assets."

The economy's long-term shift toward knowledge-based jobs and away from physical labor is another force that might be increasing the rolls of older workers. Already, older employees with higher levels of education seem to be playing a major role in the trend, and some say the psychological rewards rather than money are what motivate them.

"It's interesting work," said Feyk, who has worked at Aerospace Corp. for most of the last 45 years. "It's new challenges."

Feyk helps oversee classified work of contractors on military space and missile systems. "The things that we do, the projects that we look at, have never been done before." Still, it is unclear how far the trend toward working later in life will go. Society is much richer than the days when people worked almost until death, and early retirement continues to hold some of its allure.

Older employees can find themselves scrambling between different jobs, as companies rise and fall and long-term relationships between employer and employee become rarer.

When Jules Lippert's business of selling prebuilt homes went bust in the 1980s, he loaded a van with antiques and spent the next 16 years selling his wares at trade shows around the United States.

Finally wearying of the road, he tried to shift his business to EBay. A couple of years ago, he took up his neighbor's offer to train interviewers for market research.

Now 76, Lippert still works as many as 35 hours a week: "As long as I'm in good health, I see no reason to retire," said the suburban Philadelphia resident. "I would sit around and vegetate."

At the same time, money "is important," said the grandfather of seven. "My wife and I could exist on our combined Social Security plus our IRA, but it would not leave a lot of room for extras."

Employers will play a big role in deciding whether baby boomers' visions of an industrious old age turn out to be fantasy.

Some companies rely on the institutional memory and experience of longtime employees.

"We encourage people to stay with the company," Aerospace spokesman David L. Jonta said. "We have a lot of people that do, and we value that expertise."

Hospitals and other employers struggling with labor shortages are also known to court older employees by offering flexible schedules and extra leeway for time off.

Still, such companies "quite frankly are ahead of the curve," said Deborah R. Russell, director of workforce issues at AARP.

After interviewing 400 employers, researchers at Boston College recently concluded that many companies were only "lukewarm" about accommodating older workers who might be willing to stay on the job a few extra years.

Which doesn't make a lot of sense to Feyk.

"Somehow we're going to have to get people over 65 into productive work, because there aren't going to be enough of the young people to support them," he said.

He is not the only member of his family who feels that way. Feyk's wife, he noted, recently got a job as a church organist in San Pedro. "She's getting her W-2 right now," he said, adding: "She's just a young thing. She's only 75."





Staying on the payroll

The trend: Americans are now typically retiring at age 62, compared with age 60 in 1997, reversing decades of decline in the retirement age.

What's behind it: As employers scale back pensions and health benefits for retirees, many people cannot afford to retire. Others simply choose to work, saying they would be bored otherwise.

The consequences: By staying in the workforce, older employees generate more spendable income — buoying the economy and contributing additional income taxes. Social Security could also be helped as workers pay into the system for additional years.

Los Angeles Times


No comments: