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Roadblocks line path to retirement for older workers

Bill Alston works recently in his home office in San Jose, Calif. An engineer, he has been looking for work. “Those words like ‘overqualified’ are all smoke screens for ‘old,’ ” he says.

PATRICK TEHAN | San Jose (Calif.) Mercury News

Bill Alston works recently in his home office in San Jose, Calif. An engineer, he has been looking for work. “Those words like ‘overqualified’ are all smoke screens for ‘old,’ ” he says.

SAN JOSE, Calif.

Since the downturn began three years ago, the path to retirement for older workers has become an ever-lengthening obstacle course. • "I'm taking a pounding," said 67-year-old Bill Alston of San Jose, an engineer between jobs, on watching the stock market's convulsions. "Where do you put your money? What is a dollar going to be worth? We're really on shaky ground."

Many older workers are responding to the economic downturn by postponing retirement, but even so, it will be a struggle to make up for market losses in their retirement plans.

Some were counting on their houses as a postwork financial cushion, but now their homes are worth less. They can't depend on dividends and interest on savings; that income has nearly vanished. They also face layoffs and difficulties getting rehired.

Take Alston. He's looking for a full-time job. He has an impressive resume and a string of patents but has had trouble landing work. He has also had to dip into his retirement savings to make ends meet, even as the market has taken its own bite.

"Those words like 'overqualified' are all smoke screens for 'old,' " said Alston of the comment he has heard too often from prospective employers.

Numbers compiled by the AARP from various sources and its own survey of 5,000 Americans tell the story of being older than 50 in 2011.

Older Americans are working longer. In 1985, about 18 percent of people 65 to 69 were either working or looking for a job. In 2010, that number had grown to about 31 percent.

Nearly a third of people the AARP polled said their homes declined substantially in value.

They have a lower unemployment rate, but when they lose a job, it's hard to land a new one. At the beginning of the recession, 23 percent of unemployed people 55 years and older were out of work for more than 27 weeks; last month it was 54 percent.

Adding insult to injury, the pensions older Americans could once depend on have been replaced by defined contribution plans — 401(k)s that bob like flotsam on the tidal waves of the stock market.

A recent study by the Employee Retirement Benefit Institute found that for many Americans, the best way to fund retirement was to delay it.

Among the lowest income group, 90 percent would have to keep working through age 84 before having a 50-50 shot at fully funding retirement, the institute found. The prospects are better for the other 75 percent, but most experts advise those who have jobs that pay well to work another two to three years.

Sara Rix, policy adviser at the AARP, notes that delaying retirement a few years gives a person that much longer to have an income and health plan, contribute to a retirement plan and put off taking Social Security, which could increase those monthly checks.

For "people in good health, with jobs they like and bosses they can live with," Rix said, "it's probably not the time to give up a job."

By the numbers

In the lowest income group assessed by the Employee Retirement Benefit Institute in a recent study:

90 percent would have to keep working through age 84 before having a 50-50 shot at fully funding retirement.

Roadblocks line path to retirement for older workers 09/27/11 [Last modified: Tuesday, September 27, 2011 8:39pm]
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