More people working into golden years

CHICAGO — Americans are changing the game plan for retirement, with millions laboring right past the traditional retirement age and working into their late 60s and beyond.

While the average retirement age remains 63, that standard may soon be going the way of the gold watch — a trend expected to accelerate as baby boomers close in on retirement without sufficient savings.

For 64-year-old John Lee, "retirement" bears a strong resemblance to his full-time working career — full of 40- and 50-hour weeks as an IT technical-support specialist. He's not strapped but likes the extra cash and the feeling of being needed.

But for Melissa Fodor, a retired travel agent who works part time as a caregiver for the elderly, the extra work "keeps my head above water" and there's no end in sight to that financial need at age 68.

Although the work is satisfying, she confides that "financially, I'm kind of scared most of the time. Because what should happen if my health and my body fail?"

Growing evidence documents that people are working longer as they live longer.

Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Nearly 6 million workers last year were 65 or older.

Over the next decade, the number of 55-and-older workers is expected to rise at more than five times the rate of the overall work force, the BLS reported.

A slowing economy and stock market, squeezing funds set aside for retirement, also are contributing.

In an April survey conducted for AARP, 27 percent of workers age 45 and over and 32 percent of those 55-64 said they had pushed back their planned retirement date because of the economic downturn. The telephone poll interviewed 1,002 respondents and carried a sampling error margin of plus or minus 3.1 percentage points.

"We have people who are healthier, who are living longer and have more economic reasons to stay in the work force," said David Certner, AARP's legislative policy director. "On the employer side, you have greater demand for experienced [older] workers. That all adds up to longer work lives."

Financially viable choice

Lee never envisioned putting in long workweeks in his mid-60s.

The Marietta, Ga., resident battled frequent work stress before taking early retirement from Coca-Cola at 55. He lay awake for many restless nights thinking about the job, and believes the strain caused fibromyalgia and chronic back pain.

But when his old employer called offering contract work at his specialty, mainframe systems, he gladly accepted. Tennis and golf hadn't worked out as retirement hobbies, and he decided he could use the money for occasional trips overseas and to help out his children and grandchildren.

Lee makes more than $50,000 from the contract work.

"Going back to work wasn't the plan," he said. "But after I retired ... I really didn't have anything to do. So when they called, I jumped on it."

Lee's wife, Joyce, 60, also took early retirement but went right back to work as a real-estate agent.

They say the extra income supplements their combined $3,000 a month in company pension payments and adds to $1.3 million in assets to assure their retirement will be financially comfortable — if and when it happens.

Working longer is generally the best option for those who come up short on retirement savings. And with many people's investment portfolios and 401(k)s down significantly in recent months, it has become a compelling alternative for many retirees or near-retirees to having to live on less.

"It's always been a good idea, but right now it can be an especially good idea," said Christine Fahlund, a senior financial planner with T. Rowe Price. "You really don't want to be pulling more money out of a portfolio that's already down."

In a recent report, the investment-management group said continuing to work full time past one's anticipated retirement date could increase annual retirement income by about 7 percent for each additional year of work.

Working another three years — from 62 to 65, for example — and continuing to save 15 percent of salary could raise annual income from investments by 22 percent. Make it five years and boost savings contributions still higher — even better.

Putting off retirement also may enable people to delay when they start taking Social Security benefits, which can significantly increase payments.

"The longer the delay, the better" financially, Fahlund said. "To me, the ideal would be 70, because you get the biggest Social Security benefit possible and all those additional years of employment. And it keeps you going mentally and physically too."

Paying with their dignity

Fodor says that "to work is to have dignity." But she has little choice but to keep laboring because otherwise she couldn't pay her bills.

The Morrison, Colo., woman ended her more than three-decade career as a travel agent when work dried up after the Sept. 11 terrorism attacks but hasn't stopped working through her 60s.

First she sold paint at a home-improvement store for seven years. Now she puts in 17 hours a week as a certified nursing assistant and an additional 10 to 15 hours walking dogs and pet sitting.

Divorced and with no children, she says she will have to work "forever" to make up for a lack of savings since Social Security doesn't go far enough to make ends meet.

Caring for seniors, a job she loves, pays just $9 an hour, and dog walking pays less. Squeezed by rising prices and $20,000 in debt on her condo, she stopped buying meat, beer and pricier vegetables and cheeses this year, and is making other cutbacks.

"I feel blessed with the good health that I have. But I'm a little bit bitter because I don't think I should be scared financially at 68," she said, adding that she blames only herself for not saving more.

What disturbs her more than her situation, though, is that of all the men in their 60s, 70s and even 80s she worked with at Lowe's.

When people work out of desperation and not choice, she says, it carries little dignity.

"That's just not right," she said. "That hurts me to see that. Some of these people are supporting their grandchildren."