Chicago Edition

BUSINESS ; ZONE C; On the money ; Pg. 5

Gail MarksJarvis

Americans, coming to grips with deficient retirement savings, often say they will solve the problem by working past age 65.

And a recent study suggests that a growing number are carrying through on that plan.

In 2006, about 15.4 percent of people over 65 continued to work, according to researcher Craig Copeland of the Employee Benefit Research Institute. That's a significant increase from 1975, when only 13.7 percent were working after the traditional retirement age.

And the increase in older workers is particularly evident among the most educated members of the labor force.
"This upward trend is not surprising," said Copeland, who analyzed data from the Census Bureau's Current Population Survey. He said he believes people are staying in the workforce longer than in the past to obtain health insurance from employers, and to have more time to stuff savings into retirement plans at work.

Employees have become increasingly dependent on their own savings and investing acumen since the 1970s.
In 1974, about 44 percent of workers in the private sector were entitled to old-style pensions that guaranteed people a regular sum of money after they retired. Now, that's down to about 17 percent.

Instead, employers often offer 401(k) or 403(b) retirement savings plans. If people save enough and invest well in those plans, they can retire with ease. But if retirement sneaks up on them -- like it does for millions of Americans -- working longer might be the only way to plump up the savings.

Copeland found that 23.6 percent of people with pensions stayed in the labor force after age 55, but 47.6 percent of those without pensions worked.

There also is a distinct difference in outlook among employees with or without pensions.

Jack VanDerhei, an EBRI researcher and a Temple University professor, recently examined how confident Americans are about paying for retirement. Among people 50 and over, about 43.6 percent of people with guaranteed pensions said they were "very confident" about handling retirement. Among those with 401(k) or 403(b) plans, just 26.5 percent were very confident.

And some may be more confident than they should be. EBRI researchers found that many Americans somehow think they are going to receive a pension even when their employer, or a spouse's employer, isn't offering one. They also are counting on health insurance in retirement even when their employers don't offer it.

Dartmouth College economist Annamaria Lusardi said that about two-thirds of people retire without calculating what they will need.

Going back to work can be a solution for some when the reality of tight finances sets in. Others encounter an awakening before retiring and work longer.

Still, many who planned to work end up scrapping those plans. A Fidelity study found that 22 percent of retirees retired earlier than they intended because of health reasons. And AARP has been concerned that many employers don't want to retain older workers. The group also wants employers to offer flexible, part-time schedules to older workers.