Deseret News | Revising retirement: Workers forced to change plans

Revising retirement: Workers forced to change plans

By Jennifer Toomer-Cook
Deseret News

Published: Sunday, July 6, 2008 12:03 a.m. MDT

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Bob Wassom was at the top of his career when the advertising company he worked for merged with another. Five years later, his contract was not renewed.

That was in 2006. Wassom's buyout kept him going about a year. Now the freelance writer, too young to retire at age 58, is looking to his 401(k) to help support his family and help an adult daughter with medical bills. He plans to take out about 40 percent of his previous salary each year for five years — taxed without penalty.

Tapping into the nest egg can be unsettling, but more baby boomers are having to do it. They also are watching their retirement savings dive in a bear market. They're paying more than $4 a gallon at the pump. And food prices have jumped in recent months along the Wasatch Front.

As a result, some older workers are choosing to delay their retirement. And some retirees — about 10 percent, according to one estimate — are coming back to work to make ends meet. That is, if they can find a job.

The AARP found that one-fourth of the nation's 45-and-older crowd, surveyed in May, were struggling to make their rent or mortgage payments. Twenty-seven percent of workers said they were postponing retirement plans. The study included 1,002 respondents nationwide.

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A retirement survey conducted in January by the Employee Benefit Research Institute in Washington, D.C., found that 38 percent of those over age 55 expect to retire after age 66. Ten years ago, the same number thought they would retire between age 60 and 64.

In recent years, experts predicted that baby boomers, people 44 to 62 years old, would contribute to a massive wave of retirement, starting about now. That may no longer be.

Wassom isn't sure he wants to come back to the 9-to-5 world. A 36-year-old spinal cord injury still bothers him. He's hoping networking, contract work and freelance jobs will keep him going four more years, when he'll be old enough to retire.

"I'm doing OK but not making nearly the money I used to," said Wassom, taking time out from contract work at the AARP Utah offices in Midvale. "It's good — I'm finding new freedoms. But it's kind of scary ... waking up in the morning and not knowing what's going to happen."

Falling markets

Employees 55 and over will become the fastest-growing group of workers in the nation, making up almost a fourth of the work force by 2016, according to the U.S. Bureau of Labor Statistics. That's up from 17 percent of the work force in 2006 and 12 percent in 1996.

People are living longer, and fewer younger workers are coming into the labor force because U.S. population growth is slowing. Meanwhile, pensions have been replaced by 401(k) plans, leaving the responsibility of retirement saving and investing up to workers. Workers also have to be older to get full Social Security benefits — for a person born in 1955, it's 66 years old, versus age 62 for older workers.