A penny saved is not enough 

By: Dolores Kong
The Boston Globe, May 23, 2001

Retirement dreams of playing golf all day or driving across the country in a Winnebago may remain just that - dreams - for millions of Americans. 
Many people ages 50 and over are not saving enough money and will have to continue working to support themselves after they reach the traditional retirement age, suggests a study by the nation's largest group representing retirees. 

At the same time, old-fashioned company pensions are less common and Social Security is more at risk than in previous generations, placing many current and soon-to-be retirees in a tenuous position. 

''For people at the bottom, there's been very little progress and a lot of slippage over the last 20 years,'' said John Rother, AARP's director of legislation and public policy. 

''They are looking at retirement with none of the pieces in place and will really have no option but to try to continue to work or rely on the safety-net programs.'' 

And while Americans in the middle- and upper-income brackets are doing better than their parents in preparing for retirement, many will need to worry about spiraling health costs, and perhaps even continuing to get a paycheck, Rother said. 

The findings in the report, ''Beyond 50: A Report to the Nation on Economic Security,'' has AARP so concerned it is changing its decades-old advice for a secure retirement. 

Instead of recommending the traditional ''three-legged stool'' of Social Security, pension, and savings, AARP is pushing the ''four pillars'': Social Security, pension and savings, health insurance, and earnings. 

''The three-legged stool has been a fixture in the way we've talked to people about retirement probably for 30 years,'' said Rother, in an interview yesterday. ''As we're looking at it now, it doesn't seem appropriate anymore.'' 

Pension and savings, once two legs of the three-legged stool, were combined into one pillar in recognition of the fact that pensions in the form of 401(k)s are increasingly the same as personal savings, Rother said. 

AARP changed its name from the American Association of Retired Persons last year to just the initials, to better reflect its membership of 35 million Americans age 50 and over. Some are retired, and some are not. 
The 90-page ''Beyond 50'' report, an analysis of data from a variety of sources, contains such eye-opening statistics as: 

Four in 10 Americans over age 60 will experience poverty at some point in their later years. 

Low-income Americans ages 50 to 61 have median net worth of about $6,500, counting home equity, 401(k)s and other assets. 

Lack of health insurance for people 50 to 64 has increased, with the percentage of those without it ranging from just under 6 percent to over 30 percent in 2000, depending on income. 

The proportion of men and women working at age 65 and beyond is on the rise, reversing what had been a downward trend since the early 1900s. 

The report also contains some good news: Older Americans are healthier and better educated than their parents, and poverty among the elderly has dropped to a record low. 

The report comes just as the first baby boomers are turning 55 this year, with trend-watchers expecting the boomers to redefine retirement. 

Some specialists say the traditional notion of retirement never really applied to many older Americans, and neither did the notion of relying on just Social Security, pension, and savings. 

''Old age is not something where you sit on the porch in your rocker and rock the rest of your life away,'' said Ken McDonnell, an economist and research analyst with the Employee Benefit Research Institute, a Washington-based nonprofit. 

Whether out of financial need or boredom, many older Americans continue to work, McDonnell said. And with life expectancies of 100 not out of the question in the future, ''if you retire at age 65 and live another 35 years - that's a long time period. How are you going to afford such a thing? How is society going to afford such a thing?'' asked McDonnell. 

''I have argued ... we shouldn't even use the word `retirement','' agreed Joseph F. Quinn, dean of Boston College's College of Arts and Sciences and a researcher who has studied the phased retirement phenomenon known as ''bridge jobs.'' 

Quinn added, ''A lot of people have argued that the concept of a three-legged stool has not made sense. People on the lower end are often missing two of the legs - no savings, no home - and many Americans have no pension coverage.'' 

For that reason, Quinn called AARP's new recommendation ''good advice.'' To some Massachusetts residents age 50 and over, AARP's findings and recommendation are no surprise. 

While retirees Charles F. Moriarty of Danvers and Nancy Geiser of the Boston suburbs say they aren't working now, they worry about health care costs even though they've got Medicare. 

''I have a big health problem, severe arthritis,'' said Geiser, 67, who has dipped into savings more than planned because Social Security and pension are not enough. 

Carole Shaw, 52, owner of Victorian Fineries, a crafts business in Worcester, and Jack Agnew, 65, a founder of Agnew Carter-MS&L Public Relations in Boston, expect to work beyond the traditional retirement age. 
For Shaw, it's the finances. ''I can't imagine being able to stop at retirement age.'' 

For Agnew, it's the desire to keep busy. ''I look at retirement - even though I don't like to use the R word - as a real phased thing.''