From The Chicago Tribune, 7/9/06:
http://www.chicagotribune.com/business/chi-0607090297jul09,1,5961189.story?track=rss&ctrack=1&cset=true
Need to stay on job, but forced to retire early
By Jonathan Peterson, a staff reporter for the Los Angeles Times, a
Tribune Co. newspaper
American workers, who face growing financial pressure to stay in the
workforce, are far more likely to be forced into an early retirement
than many expect, according to a recent study.
Four out of 10 retired workers left their jobs sooner than they had
planned, usually because of health problems or the loss of employment,
according to the report by McKinsey & Co., which was based on a
national survey of 3,086 people.
The survey also found that 45 percent of people who are currently
employed planned to keep working past age 65.
But among the retirees polled, only 13 percent said they had done so.
The findings raise fresh concerns about Americans' ability to afford a
comfortable retirement.
With more companies abandoning or freezing their pensions, many people
say they plan to work longer to build up their nest eggs.
The reality "is quite sobering," said David Hunt, a senior partner at
McKinsey.
"Our research clearly shows that many people--and more than a few
public policy makers--who are betting on simply working longer to
compensate for a lack of current savings are setting themselves up for
a rude awakening and a significantly poorer standard of living in
retirement than they had expected."
Ask Rolf Marsh.
The computer programmer was 60 when he got a surprise tap on the
shoulder from IBM.
Marsh had planned to work five more years to qualify for higher
pension payments, then retire to enjoy a new phase of life, including
visits to friends in Britain and other travels with his wife.
Handwriting on wall
"I guess I was blind to the handwriting on the wall," said Marsh, who
lives near Spokane, Wash.
"I didn't think it was going to happen."
Marsh, 63, has been frustrated in his attempts to prolong his career.
"I looked for work when I first got out--basically, there's very
little up here in Spokane--and the jobs I applied for I didn't get. My
feeling was it was because of age."
Marsh estimates that his pension is less than half what it would have
been had he remained longer in the job.
To boost his income he signed up for Social Security earlier than
planned, further scaling down his retirement pay.
Eventually he and his wife took in an elderly boarder whom his wife
cares for to make ends meet.
"It's been difficult," he said.
The McKinsey survey included retirees, for which it had a 3.2 percent
margin of error, and people who are not retired, for which the margin
of error was 2.4 percent.
Among those who retired earlier than they expected 47 percent cited
health reasons and 44 percent pointed to job loss.
The remaining 9 percent said they had to care for an ailing family
member.
Wealth also had a big influence on how people's jobs come to an end.
Workers with less than $50,000 in assets were most likely to be forced
out of their careers due to health problems.
Those who had more than $1 million pointed to job loss as the greatest
reason for retiring.
For many, there is no way to see a forced retirement coming.
"They get laid off. They have health issues that prevent them from
working," said Sandra Timmerman, director of the MetLife Mature Market
Institute in Westport, Conn.
"The company merges. A spouse gets sick. A parent gets sick. The job
becomes more pressured."
At the same time, Timmerman noted, workers face the need to maintain
their careers to set aside money for retirement.
"I think we're seeing the realization on the part of people that they
ought to extend their work life longer than in the past," she said.
It is a realization brought on by the changing landscape for
retirement security.
Many employers no longer provide traditional pensions with guaranteed
monthly payments.
Instead they offer 401(k) savings plans, and it's up to the workers to
salt away enough money to last them in old age.
Surprise for Boomers
The oldest members of the vast Baby Boom generation turned 60 this
year.
Members of this generation often cite the need to boost their
retirement savings as a reason to keep working, McKinsey's Hunt noted.
"Many of the Boomers we interviewed, especially those in their early
50s, believe that they will be able to afford retirement by continuing
to work--and often put off the sacrifice of saving today with this in
mind," he said.
John Rother, AARP's executive officer for policy and strategy, said
the findings underscore the fact that many who expect to stay on the
job will face an uphill battle to keep their careers moving forward.
"We know that people who lose jobs in their 50s and early 60s have a
very difficult time finding new employment," Rother said.
For much of the 20th Century the trend was toward earlier retirement
as America became more prosperous and elderly people were able to
survive with the help of Social Security.
In recent years, however, the retirement age has begun to edge upward,
said Joseph Quinn, dean of arts and sciences at Boston College and an
expert on retirement trends.
Better health, laws against age discrimination and a phase-out of
penalties in the Social Security program for working past retirement
age have all made it possible for people to work longer, he said.
The McKinsey figures do not mean that trends toward a later age of
retirement are changing, experts said.
But they offer a cautionary note for those who would discount the
challenges of working into their late 60s or beyond, and they
underscore that many who assume they will work late into life may be
mistaken.
Said Rother:
"This kind of information is clearly not what the Boomers expect."
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Harry
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