Dashed Dreams of Retirement

(McClatchy-Tribune Regional News delivered by Newstex) -- Popping open a beer at his dining room table, Sunoco refinery worker John Read signed the last document, slipped his retirement paperwork into an envelope, and began to dream about the future.

"All the things I could do, all the things I wanted to repair, just being home, playing with grandkids."

But something kept Read, 58, from mailing in the forms he had signed Sept. 15.

On Monday, joining others around the nation backtracking on plans to retire because of the plunging stock market, Read called his boss and officially canceled his retirement.

"I started watching the market," recalled Read, who lives in Millville in Cumberland County. "Things really started going down."

His stash of $1.1 million, built up after 36 years of working overtime in all kinds of weather, began to slide.

With retirement set to start at the end of the month, Read said he "could see the end of the tunnel—that you are finally done. If I was in a job I really didn't like, I would be really disappointed."

Cherry Hill salesman Tom Baldwin also watched his investments fall. That's why he and his wife will be working at least one more year. They had planned to retire in May.

Airline pilot John Golly and his flight attendant wife, Mary, of Wilmington, cannot afford to stop working.

Neither can nurse Bobbi McClay of Garnet Valley in Delaware County. She had planned to retire next August, when she turned 62.

Not now.

Her pension would have given her enough to live on, but she wanted to count on a 401(k) for emergencies. "I lost 30 percent," she said. "I'm not retiring because I will not have enough backup."

Amtrak electric-traction worker Gary Jester's home in Langhorne didn't sell for a year, delaying his retirement.

"Your body gets beat up," said Jester, 60, who worked outdoors 35 years for Amtrak.

When retirement expert Richard W. Johnson looks at U.S. Labor Department statistics, he spots the glimmering of a trend -- more men, still the traditional principal breadwinners, are continuing to work past age 65.

A year ago, about 33 percent of men aged 65 to 69 in the labor force—meaning they wanted to work, rather than be retired—actually had jobs. This year, it's around 36 percent. Ten years ago, it was about 25 percent.

Beyond the numbers, Johnson is hearing the stories of people who simply cannot afford to quit.

"When we see $2 trillion in losses in retirement funds, we think people will not be able to retire as early as they might have been," said Johnson, at the Urban Institute, a Washington think tank.

Here's what he's seeing:

From Sept. 30, 2007, to Sept. 30, 2008, retirement accounts lost $1.6 trillion, or 18.3 percent of their value, he said, citing government studies. The situation has worsened since then.

The median value of retirement accounts dropped from $105,800 in 2007 to $89,300 in 2008—as of Sept. 30 in both years—wiping out most gains since September 2005.

A decline in housing prices may affect seniors who hoped to finance their retirement by selling their homes. However, because many bought their homes decades ago, they can still benefit from a rise in real estate prices despite the recent drop.

Staying employed, if you can, is the best hedge: One in four workers employed between the ages of 51 and 55 typically gets laid off within 14 years, according to one study. Such individuals take longer to find new jobs and return to work at lower wages.

Unemployment, which has increased, hurts retirement saving for those in their 50s and 60s. That's when, after years of child-rearing expenses, they are using peak earnings to finally build retirement nest eggs.

"This is primarily a middle-class problem," Johnson said. "People at the bottom don't have much savings to begin with, so they won't be hit with declines in the stock market."

Compounding the problem is the shift toward 401(k)-funded retirements based on investments and away from traditional employer-funded pension plans—many insured by the federal government.

The erosion of employer-funded pensions is partly why US Airways (NYSE:LCC) pilot John Golly, 60, and his wife, Mary, 56, a flight attendant, are still working and haven't retired to Florida, as planned.

In bankruptcies in 2002 and 2004, judges allowed US Airways Group Inc. to terminate pension plans, leaving the Gollys with the minimum fallback pension from the U.S. Pension Benefit Guaranty Corp. After the second bankruptcy, "I lost the postretirement benefits that were going to get us from 60 to 65," said John Golly, sitting with his wife at their kitchen table.

"We were both very angry," Mary Golly said. "You have to overcome it and move on."

Even so, he expected they'd be able to manage -- particularly since he had invested heavily in Washington Mutual Inc. (OOTC:WAMUQ) , one of the nation's biggest savings banks. That had to be a sure bet.

On Sept. 25, Washington Mutual, with $307 billion in assets, collapsed -- the biggest bank failure in U.S. history.

"We are down about 30 percent," Golly said, describing his investment portfolio.

Luckily, last November, seven months before Golly turned 60 in June, federal aviation rules that mandated pilot retirement at age 60 changed to allow pilots to fly until 65. "It's a catch-22," said Golly, who now figures he'll fly until he is 65. "Yeah, I get to work five more years, but yeah, I have to work five more years."

Meanwhile, the Pension Benefit Guaranty Corp., with assets of $68 billion, has lost $4.8 billion since the start of the year, $1.7 billion in September alone, according to congressional reports.

Albert Einstein Hospital nurse practitioner Carol Hutelmyer, 66, is relying on her two employer-based pensions, augmented by a 401(k) plan. She retired on Sept. 30 after 42 years on the job -- just in time for the market free fall.

"It happened within a week after I retired," said Hutelmyer, of Center City.

"I thought, 'I can't look at my investments and I haven't,' " she said. She hadn't planned to tap into the 401(k) for several years anyway, so she's hoping the market will rebound enough for her to stay retired.

"I'm taking an art history course in the museum," she said. "I made the decision that I am going to expand other parts of my brain."

Fortunately, nurses can always get work. "The profession gives you a lot of flexibility," she said.

Philadelphian Linda Washington, 59, retired last month—and not exactly by choice.

In September, fearing she'd be laid off from a major local pharmaceutical company, she raised her hand to accept an early-retirement package.

"That was the week before the stock market crashed," she said. "But the economy made me pause."

In the end, she said, she continued with her plans, taking her pension in a lump sum along with a severance package. Her former company will cover health insurance for her family at a discount.

Washington knows that she will have to work before Social Security kicks in at 62, but she is confident she'll find a job. Meanwhile, she's making jewelry, hoping to sell some to holiday shoppers.

"Practically speaking, I needed a rest," she said. "Now I have an opportunity to do other things that I would like to do."

Contact staff writer Jane M. Von Bergen at 215-854-2769 or jvonbergen@phillynews.com.

Newstex ID: KRTB-0160-29382858