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'Golden years' dim for graying workers

| Saturday, Oct. 5, 2013, 9:00 p.m.

Before the recession, Madie Green's home day care was usually full. As parents lost their jobs and pulled kids out, the 55-year-old District Heights, Md., woman spent through her savings to keep up on her mortgage and auto payments.

Her business still hasn't recovered to what it once was, and she's so worried about whether she'll be able to retire that she is expanding into an after-school program for elementary- and middle-school students.

Retirement seems more distant than ever.

“It's no longer the golden years,” Green said.

These days, the sentiment is more common.

Though stock prices are rising, unemployment is falling and the economy is growing, more workers are choosing to stay in the labor force longer. The trend reverses decades of steadily falling retirement ages. During the recession, delaying retirement was spurred by job losses, salary reductions, depressed home prices and depleted savings. Now, workers anticipate smaller returns on their investments. Health benefits for retirees are eroding even as costs are rising. Meanwhile, people are living longer, healthier lives — all of which adds to a need to work and save longer.

The share of workers nationwide ages 45 to 60 who planned to delay retirement soared to 62 percent last year, the Conference Board reported, up from 42 percent in 2010.

Separately, analysts at the University of Michigan's Institute for Social Research found that about 40 percent of older Americans have delayed their planned retirement since the end of the recession.

Since the recession ended, “a lot of people spent more than they earned and had to continue to deplete their savings, and that makes them less prepared for retirement,” said Gad Levanon, director of macroeconomic research for the Conference Board. “People were unemployed for a while, or worked part-time or got significant pay cuts and were unable to cover their expenses. Savings shrunk and made them more willing to delay retirement.”

The Conference Board found that workers 45 to 60 who have lost a job, endured a salary cut or suffered a decline in home value are more likely than others to plan to delay retirement. But even workers who were not significantly hurt by the recession are more likely than before to plan to work longer. That trend held true across all ethnic, gender and income lines.

CareerBuilder found 60 percent of workers 60 or older planned to look for another job after retiring from their current company — up from 57 percent last year. About three-quarters of respondents planned to work another one to six years, and more than 1 in 10 of 680 workers surveyed said they probably never would be able to retire.

On average, those who delayed retirement are waiting about one and a half years longer than they originally planned to leave their jobs, said Brooke Helppie McFall, an economist with Michigan's Institute for Social Research.

Many workers have lost too much value in savings and other assets or were forced to draw down on those assets, McFall said. A typical household lost about 5 percent of its total wealth between the summers of 2008 and 2009. The biggest asset for most people is their home, and housing prices still have not recovered pre-recession levels.

The recession exerted particular influence on the retirement plans of men 55 to 64, U.S. Labor Department statistics show.

“Their retirement is less secure than they had thought,” said labor economist Heidi Shierholz, either because of a decrease in assets or a loss of a job that left a long-term income gap.

“More of them are in the labor force than there would be if the Great Recession hadn't happened,” said Shierholz, with the Washington-based Economic Policy Institute, who compared Bureau of Labor Statistics pre-recession projections to actual employment figures.

Jeff Miller realized two years ago he would not meet his goal of retiring at 62.

A computer server engineer at a Frederick, Md., data center for Marriott International, Miller suffered losses in the value of his 401(k) and his home. Plus, he has seven more years to pay off a student loan for his son.

At 61, he expects to work at least six more years.

“I was hoping for 62, but that went out the window when the economy went south,” Miller said. “And I couldn't have sold my house four years ago.”

He and his wife, a real estate agent who's not ready to stop working, have put off plans to sell their home in Monrovia, Md., and retire out of state, where they hope to pay lower taxes on a comparable home.

Staying at work longer might be the financially savvy way to go anyway, financial planners say.

“Sometimes it's OK for those who are happy in their jobs,” said Christopher Brown, president of Ivy League Financial Advisors in Rockville, Md. “Sometimes it's painful.”

“The big question that each client asks as they prepare for retirement is, ‘Can I live the lifestyle I want to live without running out of money?' ” Brown said. “When the market hit the skids in 2008, a lot of people's retirement portfolios were really hurt. They want to build some cushion into their retirement if it happens again.”

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