For Many Seniors, There May Be No Retirement

The Wall Street Journal

When Angela Gregor's mother became ill and needed long-term care in the 1990s, Ms. Gregor tapped her individual retirement account for funds and stopped making contributions. Then came the tumultuous stock-market ups and downs of the past decade, dealing the IRA another blow.

To make ends meet, Ms. Gregor went back to work part time last September, as a data-entry clerk at a senior center near Chicago. The 67-year-old hopes to retire by age 70, but says she'll have a hard time doing so if she can't sell her home.

"Everything is more expensive. I cannot retire, I wish I could," says Ms. Gregor. "Like most older people, my money is in my home. ... I'm caught between a rock and a hard place."

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Many older people are finding themselves in a position they never expected to be in at retirement age: still working or in need of a job.

And the laundry list of reasons just keeps growing. Already battered nest eggs took another beating this month with the market's wild swings. With interest rates essentially at zero since 2008, income from Treasurys and certificates of deposit is pretty paltry. And the Federal Reserve recently said it would likely keep rates "exceptionally low" through mid-2013. On top of that, housing prices are still in the doldrums, leaving homeowners with much less equity to tap.

More than three in five U.S. workers in their 50s and 60s plan on working past 65 — and 47% of that group say they'll do so because they'll need the money or health benefits, according to a 2011 study from the nonprofit Transamerica Center for Retirement Studies.

But in this tight labor market, working into your golden years isn't easy. And you'll have to make your age and years on the job come across as assets, not liabilities. In addition, with the current market upheaval, you'll need a financial plan that puts your savings on the fast track and takes into account how Social Security and Medicare benefits could be affected.

Staying the Course

For many older workers, the easiest option may be to continue with their current employer. But that will entail making themselves essential.

Workers should take on new projects when possible. And it's crucial to stay on top of the latest technology being used; you don't want to be perceived as the old guy who doesn't know what's going on.

Older employees also can put their experience to use — and on display — by volunteering to mentor younger workers either formally or informally.

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Dave Bowe, 70, says he has kept his position at Stacy Adams Shoe Co. since 1977 because he has continued to be one of the men's footwear company's top-selling sales representatives. He says working has helped him pay for expenses related to his wife's disability and keep insurance that covers her medical expenses, though he also enjoys the job.

Mr. Bowe says he stays close with longtime customers, answering their calls at night or on the weekend. When he had to cut back on overnight travel when his wife became disabled, he made up for lost business by aggressively pursuing new clients closer to home.

"I have to produce or the company wouldn't let me work out here," says Mr. Bowe.

Of course, some workers may have to take illness or physical limitations into account. If you feel like you can no longer manage physical labor, late hours or travel, talk to your manager about moving to a different position, says Beverly Harvey, a career coach in Pierson, Fla. Suggest the position you'd like to move to and show how you're qualified for it, she says. If your boss is the one initiating such a conversation, chances are your standing at the company has already suffered.

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Another option is phased retirement programs that let workers gradually reduce their hours, says Cornelia Gamlem, president of human-resources consulting firm GEMS Group. There also are job-sharing arrangements, she says. For instance, if you and a co-worker are both thinking of paring your work hours, approach management with a plan detailing how you could divide your time and responsibilities.

Just keep in mind that a change to your full-time status could affect your eligibility for benefits such as health insurance or a 401(k) match.

Starting Over

Finding employment outside your company will present more of a challenge since you essentially have to prove yourself from scratch.

Ideally, you want to seek work within the same industry to take advantage of your network and work experience. If you look in a different field, figure out what skills you can translate into a new role.

When Ms. Gregor interviewed for her position at the senior center, she highlighted the computer and accounting skills she'd honed in decades of office work, even though she had most recently worked as a home health aide.

Some employers are known to hire senior citizens. AARP (aarp.org) has a directory. Search for "National Employer Team." Some temporary-employment agencies, including Kelly Services and Adecco, specialize in placing seniors.

Keep Saving

While you may need a steady paycheck to pay the bills, you'll still need to save for when you eventually do stop working.

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Workers age 50 and older typically can contribute an additional $5,500 to a 401(k) annually and an extra $1,000 to an IRA. You also can get a tax credit of up to $2,000 annually if you contribute to a retirement plan and make $55,500 or less (for joint filers) or $27,750 (for single filers).

You generally don't have to take required distributions from your 401(k) as long as you keep working for the employer offering the plan — regardless of your age. But at age 70 1/2, you'll need to start taking annual distributions from a regular IRA. So make a plan to set aside or reinvest as much of those distributions as you can afford.

Hold off on taking Social Security benefits as long as possible since the longer you wait, the higher your monthly benefit will be. If you keep working, benefits are likely to be subject to federal income tax and may be further reduced if you take them before full retirement age. Finally, if you're using Medicare, keep in mind that your premiums are determined by your income.

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