By Christine Dugas, USA TODAY
They grew up during a time of cultural change, and now are being forced to redefine retirement at midlife.
The 77 million Americans in the Baby Boom generation face an economic storm: The Wall Street meltdown trampled their retirement nest eggs more than any other group. After losing jobs during what they thought would be some of their peak earning years, many are struggling to get back into the workforce. Health care costs are rising, and declining home values mean they might not be able to count on home equity to guarantee an easier retirement.
The confluence of events has an even bigger impact on a subset of the Baby Boomers known to analysts as the Sandwich Generation. Those Boomers are putting money toward their children's college education and their aging parents' long-term care, as well as their own retirement savings.
The reality is sinking in: Baby Boomers, born from 1946 to 1964, are planning to work longer, save more money and spend less, to reach any semblance of the retirement they once envisioned. According to AARP:
•35% of those ages 45 to 54 have stopped putting money into their 401(k), IRA or other retirement accounts.
•25% said they have prematurely withdrawn funds from their retirement accounts.
•56% have postponed a major purchase.
•24% have postponed plans to retire.
"Today, I see myself working until I drop," says Kyril Wickenberg, 59, of Savannah, Ga.
Baby Boomers also are out of work longer than younger Americans. Last year, they were out of work 22 weeks on average, compared with 15 weeks for the 20- to 24-year-old age group, according to the Bureau of Labor Statistics.
They may find it hard to get a new job because they've had higher salaries. And that means they may have a higher threshold before they're willing to take another job, says Maria Heidkamp, a senior project manager at the John J. Heldrich Center for Workforce Development at Rutgers University.
Even workers who thought they had planned perfectly and saved enough for their retirement are refocusing.
"I envisioned that I would be working in my corporate gig until age 67," says Albert Feliu, 48, who lives in Lilburn, Ga., with his wife and two children. He had a pension plan, and he made the maximum contribution to his 401(k) plan.
"Short of this financial mayhem, I was on a fairly good track," he says. "I saved money and lived within my means. I was the poster boy for what American middle-aged people should be doing."
Last December, he was laid off from his job as a senior project manager at AT&T. His wife continues to work full time, but she has reduced her 401(k) contribution. Their daughter is a senior in high school, and college tuition is a big concern.
Feliu is worried about his career. He's teaching an online class for the Keller Graduate School of Management of DeVry University.
"I'm working just to be able to pay for my health care costs out of current dollars and not have to take it from my retirement savings," he says. "Right now, it's kind of a batten-down-the-hatches type of mode."
Middle-class Boomers have few options for improving their retirement goals. If they maintain their current standard of living and don't cut costs, three out of five will outlive their financial assets in retirement, according to a new report from Americans for Secure Retirement, a coalition of more than 40 organizations.
A growing number of Boomers are seeking help from credit counselors. Among that age group alone, 399,217 went to the National Foundation for Credit Counseling for assistance last year, up from 321,710 in 2007.
"Instead of people in their early 30s, which used to be the average, more people in their late 40s and early 50s are coming to us now," says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies. "That increase is unprecedented."
Life changes are becoming a focus, along with retirement-expectation changes.
Randal Walker, 50, was laid off from his job as a national sales and operations manager at a computer repair company in April 2008. His wife, Christina, lost her job 45 days later. At the time, they lived in Long Beach, where they owned their home. After being unemployed for nearly a year, they moved to Glen Ellyn, Ill., where they both have new jobs. Given the downturn in the housing market, they've rented their California home rather than trying to sell it.
Walker feels fortunate to have a position as a regional manager of a medical company. But the experience has changed him.
"I spend money differently," he says. He now tries to shop at mom-and-pop stores, because he would rather help support their business than a corporation's. He eats out less and rents a movie rather than going to a theater.
Walker says that he had a clear plan for retirement before he lost his job. "But I don't have a clue anymore."
No comments:
Post a Comment