Older Workers Rethinking Retirement

Bob Moos of Dallas Morning News (via AARPBulletinToday) reports: "Older Workers Rethinking Retirement". This article draws the spotlight on to the troubling ways that older Americans are trying to cope with the exposure of their retirement nest eggs to declining market conditions. The article quotes three 60-65 year olds, who for one reason or another tied to market conditions have chosen to continue working. Their stories are a troubling reminder for what lies in store for millions of Baby Boomers facing retirement over the next 10-15 years.

The first story is about Neal Ator of McKinney, Texas, does not sound so bad:

...the 65-year-old McKinney resident has since taken a part-time job as a loan officer to supplement his retirement income.

Drawing on his experience as a credit counselor, he sells reverse mortgages out of his home. He hopes the paycheck will offset the losses from his investments and pay for some travel with his wife.

"Many of my neighbors have also come out of retirement," Mr. Ator said. "Besides the satisfaction we get from our jobs, we're all trying to make sure our nest eggs last as long as we do."

The second story is about Scott Daily of Carrolton, Texas. Now things start to get interesting. I will hold my comments until later:

Scott Daily of Carrollton figured he had had enough of the corporate world last year after going through his fourth downsizing. He was looking forward to kicking back, riding his motorcycle and tinkering with old cars.

"I talked to my financial planner, who thought I could afford to do those things, even though I'm only 60," he said. "I'm debt-free -- I don't even have a mortgage. And I've been able to save for my retirement."

Then the market took a nosedive, slashing 30 percent from Mr. Daily's portfolio and sending him in search of a job again.

"I'm not hurting, but I'm wondering whether the economy will deteriorate further," he said.

Over his career, Mr. Daily managed dozens of construction projects across the country, traveling more than 3 million miles. He's now trying to find an employer who values that hands-on experience.

My comment for Mr. Daily: Who is giving you financial advice that is causing you to lose 30% of your portfolio at age 60? Or did I miss the boat on something - is 60 the new 30?

The next and final story is about Peter Laux of Plano, Texas.

Peter Laux, who's 65 and lives in Plano, works as a management consultant four days a week because he believes he can't afford to take much from his shrunken nest egg, which has lost 20 percent in a year.

"If the market were better, I wouldn't work at all," he said. "But my cardiologist tells me I may live to be 95, and my mutual funds certainly aren't giving me the kind of returns I'll need to last that long."

Mr. Laux, who took an early retirement package from Texas Instruments Inc. (NYSE:TXN) , intends to draw Social Security when he reaches 66. But his consulting income lets him enjoy a more comfortable lifestyle.

"Because I don't see myself sitting at home and eating cat food, I will keep chasing consulting jobs," he said.

My comment for Mr. Laux: (essentially the same as for Mr. Daily above) Who is giving you financial advice that is causing you to lose 20% of your portfolio in one year at age 65? Or did I miss the boat on something - is 65 the new 35?

Three stories of retirees or near-retirees from relatively well-heeled suburbs of Dallas, Texas are not a statistically significant sample of individuals in order to represent what the vast majority of Baby Boomers are going to be facing over the next decade. However, these are cautionary tales at best - with coded messages for both retirement savers as well as policy makers. Social Security by itself is not enough, guaranteeing in some locales around the country barely a poverty-level monthly benefit payment, and a purely market-based defined contribution savings system that is too volatile to give savers peace of mind in their sunset years.